Hints for first assignment
Here are a few things to think about in writing up the answers to the homework.
Problem 1.
For this one, each part has 2 transactions. Determine if the transaction falls into a current account transaction or a financial account transaction. Then, the answer to the problem is the "net" effect on the current account. If it enters the current account as an "export" it would be a credit transaction, contributing in the "surplus" direction. If it enters as an "import" it would be a debit transaction, contributing in the "deficit" direction. (These are points that can be detailed in the "explanations".)
Problem 2.
You need to solve for "official transactions" or OR. This is what was discussed in class today. Note that this account is "simple" in that you should ignore the "capital account" (line 39 on the BOP handout) and the "financial derivatives" (line 70).
Problem 3.
Similar to Problem 1, you need to identify if it appears on the Financial account and where (and as a credit or a debit).
Problem 4.
More of a thought question.
Basically, it is asking you to consider what the offsetting transactions on the financial account means. Make use of the readings. Also just think about the situation today in the U.S. We clearly run a current account deficit. What is the downside / upside to being able to buy more than we produce? And consider what this means on the financial account. If a deficit results in a capital outflow (foreigners "lending" us resources), is this good for "business" in the U.S. (employment, productivity, etc.) What about the "income payments" from foreign ownership of capital in the U.S.?
I'll have more thoughts on this in class discussion on Wednesday, but I want you to think about it in advance. I want to see how deeply you think beyond the numbers.
On Wednesday I'll say more about your test that is Friday.
Finally, I'm sorry I've been keeping you late. I'll aim to do better getting you out on time. But I really wanted to get a point clarified and concluded today. Those extra few minutes should have been necessarily insightful and helpful in finishing up this homework.
(Why did it seem that people weren't interested in sharing values of calculations? Are you not doing them? Are you shy? These should be the easiest answers for the shy people to participate.)
Problem 1.
For this one, each part has 2 transactions. Determine if the transaction falls into a current account transaction or a financial account transaction. Then, the answer to the problem is the "net" effect on the current account. If it enters the current account as an "export" it would be a credit transaction, contributing in the "surplus" direction. If it enters as an "import" it would be a debit transaction, contributing in the "deficit" direction. (These are points that can be detailed in the "explanations".)
Problem 2.
You need to solve for "official transactions" or OR. This is what was discussed in class today. Note that this account is "simple" in that you should ignore the "capital account" (line 39 on the BOP handout) and the "financial derivatives" (line 70).
Problem 3.
Similar to Problem 1, you need to identify if it appears on the Financial account and where (and as a credit or a debit).
Problem 4.
More of a thought question.
Basically, it is asking you to consider what the offsetting transactions on the financial account means. Make use of the readings. Also just think about the situation today in the U.S. We clearly run a current account deficit. What is the downside / upside to being able to buy more than we produce? And consider what this means on the financial account. If a deficit results in a capital outflow (foreigners "lending" us resources), is this good for "business" in the U.S. (employment, productivity, etc.) What about the "income payments" from foreign ownership of capital in the U.S.?
I'll have more thoughts on this in class discussion on Wednesday, but I want you to think about it in advance. I want to see how deeply you think beyond the numbers.
On Wednesday I'll say more about your test that is Friday.
Finally, I'm sorry I've been keeping you late. I'll aim to do better getting you out on time. But I really wanted to get a point clarified and concluded today. Those extra few minutes should have been necessarily insightful and helpful in finishing up this homework.
(Why did it seem that people weren't interested in sharing values of calculations? Are you not doing them? Are you shy? These should be the easiest answers for the shy people to participate.)
posted by Atomic Kid at 4:20 AM
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