Balance of Payment--Q help plz

Question 1. Explain how each of the following transactions would be treated in Hong Kong’s Balance of Payments accounts. (Remember that there are two entries per transaction and you have to make assumption on the other entry which is not mentioned in the question.)

(a)A US resident spent his vacation in Hong Kong, spending HK$3,000 there on hotel room, food, transportation, and so on.

(b)A tourist bought a souvenir in Hong Kong for HK$1,000, but he did not declare it at customs. Therefore, there was no official record for this transaction.

(c)A Hong Kong car dealer imported a new car from Italy for HK$1m, and then resold it in Hong Kong for HK$1.5m.

(d) A Hong Kong company issued new shares in NYSE to raise US$100m. The proceeds were then invested in a new production plant in Hong Kong.

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  • 1 decade ago
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    (a)A US resident's spending HK$3,000 in HK

    1-belongs to exported tourist service in HK.

    It is a credit item of invisibe trade a/c in current a/c of HK's BOA.

    2-belongs to imported tourist service in US.

    It is a debit item of invisibe trade a/c in current a/c of US's BOA.

    (b) no official record for this transaction- no item to post in HK's BOA.

    It is uncertain for US's BOA.

    If he did declare it at US's customs,

    it's debit item of invisibe trade a/c in current a/c of US's BOA.

    (c)A new car is an imported car from Italy for HK$1m

    1-belongs to imported goods in HK.

    It is a debit item of visibe trade a/c in current a/c of HK's BOA.

    2-belongs to exported goods in US.

    It is a credit item of visibe trade a/c in current a/c of US's BOA

    "Reselling it in Hong Kong for HK$1.5m"

    is not an international transaction,so it is excluded in BOA.

    (d)Hong Kong company's selling new shares of US$100m

    in NYSE(NEW YORK STOCK EXCHANGE)

    1-belongs to a inflow of financial investment in HK.

    It is a debit item of financial a/c of HK's BOA.

    2-belongs to an outflow of financial investment inUS.

    It is a credit item of financial a/c of US's BOA.

    The proceeds(of HONG KONG company) that is invested in a new production plant in HONG KONG

    -NOT an international transaction,so it is excluded in BOA.

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