Question

Categorize each transaction according to the U.S. account to which it belongs and the direction the money flows.

a. An Australian company buys steel from a U.S. firm.
b. The Federal Reserve buys $2 billion worth of euros.
c. Profits are earned by a U.S. based mining company operating in Mexico.
d. An English company purchases a U.S. confectionary manufacturer.

Answer 1

Answer: The transactions along with the money flow are as follows:

Step-by-step explanation:

a. When an Australian company purchases steel from the U.S firm then the U. S firm receives the payment for its sale of goods.

b. The purchase of foreign currency will in turn be the payment to the foreigners.

c. The profit earned by the U.S based company is factor income. It is the payment obtained from the foreigners.

d. The English company is buying the assets from the U.S. confectionery manufacturer. This will involve the private sale as well as the purchase of the assets and payment from foreigners.