Question: Explain the numerical effects on both the U.S. current and capital accounts from each of these examples.
a. In the United States, the Best Buy company purchases $1 million worth of TVs from the Samsung corporation, a Korean firm, using U.S. dollars. In addition, Samsung keeps the U.S. dollars.
b. Best Buy purchases $1 million worth of TVs from the Samsung corporation, using U.S. dollars. Samsung then trades its dollars to a third party for won, the Korean currency.
c. Best Buy trades $1 million for Korean won and then uses the won to buy TVs from Samsung.