a. Determine which account of the Balance of Payments is affected by each of the following transactions. (E.g. Current Account – Transfers)i. A local firm ships US$80 million of merchandise to...

a. Determine which account of the Balance of Payments is affected by each of the following transactions. (E.g. Current Account – Transfers)i. A local firm ships US$80 million of merchandise to Chinaii. National Commercial Bank, a local company, pays US$1 million in dividends to foreign shareholdersiii. A German company builds a manufacturing facility in your country.iv. A local resident purchases a retirement condo in Florida for US$10 million.v. You invest in the South Korean stock market by buying US$500 in stock.b. Consider three countries Hungary, Mexico and the United States, which sell identical t-shirts.  If the price of the t-shirt is 500 forint, 20 pesos and US$2.  Calculate the purchasing power parity exchange rate between i. Mexico and the USii. Hungary and the USc.  Suppose the current exchange rate between the Mexican peso and the US dollar is 12 peso = US$! and the exchange rate between the Hungarian forint and the US dollar is 215 forint = US$1.  Based on the PPP calculations in part a, what do you expect to happen to the exchange rate between:i.Mexico and the USii. Hungary and the US