Essay
For each of the following transactions,explain what happens to the merchandise trade balance,current account balance,and financial account balance in both the United States and Mexico.The exchange rate is 2 Mexican pesos per U.S.dollar.
(a)A Mexican firm spends 4 million pesos to buy radiology equipment from a U.S.firm.
(b)A U.S.firm buys 20,000 sombreros at 20 pesos each.
(c)Mexican computer firms send 200 programmers to universities in the United States,paying tuition and expenses of $3000 each.
(d)A Mexican entrepreneur gives 50,000 pesos to the United Way of San Antonio,Texas.
(e)Mexican investors buy $10 million worth of 30-year U.S.Treasury bonds.
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(a)U.S.merchandise trade balance and cur...View Answer
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