INTERNATIONAL FINANCE/MACROECONOMICS You have been appointed policy advisor of the country Economia. The country is an o

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INTERNATIONAL FINANCE/MACROECONOMICS
You have been appointed policy advisor of the
country Economia. The country is an open economy, has a
floating exchange rate regime and uses the Econ as its
currency. (with graphs)
2. (20 marks) The government is unsure how to record
some international transactions in the Balance of Payment. Show
(using the credit/debit tables) how each of the following
transactions should be recorded in Economia’s Balance of
Payments. You should specify the account that is affected and the
accompanying credit/debit entry.
A company in Economia buys a patent from a German
company for 1 million Econs. (5 marks)
A French worker living and working in Economia sends
500 Econs worth of Economia’s wine to his
family in France. (5 marks)
A foreign lender forgives 1 million Econs worth
of Economia’s debt. (5 marks)
A German engineer receives 1,000 Econs for services
provided to a company in Economia. (5 marks)