Section 2.b discussed how the balance of payments is made up of different accounts. After dividing students into groups of three or four, have each group meet for five minutes to determine how the following transactions would be classified in the current account of the U.S. balance of payments (as either merchandise, services, investment income, or unilateral transfers). In each case, the balancing entry is to the capital account, so students should just find the correct classification for the component of the current account. After the five minutes are over, groups will be called upon to provide their classifications (which account is relevant and whether the transaction is a debit or credit).

1. Telefonos de Mexico pays $5 million to the Bank of America in San Francisco for interest on a loan.
   Answer: credit Investment Income
2. Texas Instruments buys $2 million worth of computer chips from a firm in Singapore.
   Answer: debit Merchandise
3. The U.S. government gives the government of Egypt $3 million I foreign aid to build a new irrigation system.
   Answer: debit Unilateral Transfers
4. Lisa from Los Angeles, California, travels to Rome, Italy, and spends $4,000 on hotels and sightseeing.
   Answer: debit Services