Categorize each transaction according to the U. S. account to which it belongs and the direction the money flows. AccountDirection of flowAn Australian company buys steel from a U. S. firm. The Federal Reserve buys $2 billion worth of euros. Profits are earned by a U. S. based mining company operatingin Mexico. An English company purchases a U. S.confectionary manufacturer. Financial accountPayment from foreignersFactor incomePayment to foreignersPayment from foreignersCurrent accountFinancial accountCurrent account

Financial account transactions are those that involve capital goods or purchases.

The Current account is for goods and services.

1. Australian company buys steel from a U.S. firm. - Current Account. Payment from foreigners.

This is a purchase of a good being steel and the payment was made by foreigners to a U.S. firm.

2. The Federal Reserve buys $2 billion worth of euros. Financial Account. Payment to foreigners.

This is a capital flow involving the purchase of another currency. It was done by paying foreigners.

3. Profits are earned by a U.S. based mining company operating in Mexico. Current Account. Payment from foreigners.

These profits were made from business operations offering goods and services so is for the current account. The profits was made from Mexico so is a Payment from foreigners.

4. An English company purchases a U.S. confectionery manufacturer. Financial Account. Payment from Foreigners.

The English company invested in owing the confectionery manufacturer so this is a capital transaction. It involved a foreign company paying a U.S. company so is a payment from foreigners.