Suppose a US company purchases 1 million Euros’ worth of automobiles from a German car manufacturer and pays with the proceeds from the sale of Eurobonds. In the same month, a German investor sells $50 million of US Treasury Bills and deposits the proceeds into a US dollar checking account.


Required:

Calculate the impact of each of these transactions for the balance of payments, explaining in which balance of payments account and whether as a debit or a credit each transaction is recorded.