Balance of Payments (Billions of dollars) Current Accounts U.S. merchandise exports +70 U.S. merchandise imports -67 Merchandise trade balance U.S. service exports U.S. service imports +70 Services balance +35 Goods and services balance +38 Net investment income from abroad -2 Net unilateral transfers -8 Current account balance Financial Accounts Change in U.S.-owned assets abroad Change in foreign-owner assets in the U.S. -40 +42 Financial account balance Statistical discrepancy -30 Trade balance Suppose an Argentine logging company purchases American-made chainsaws. This would be entered as a item under the section of the U.S. current account. According to the table, the United States is running a trade The current account balance suggests that U.S. current account transactions (exports and imports of goods and services, as well as inflow and outflow of investment income and transfers) created outpayments of foreign currencies from the United States that were the inpayments of foreign currencies to the United States. Any surplus or deficit in one account must be offset by deficits or surpluses in other balance-of-payments accounts. Because the current account is in , the excess of foreign currency held by Americans must either be loaned to foreigners or used to buy foreign stocks or bonds. All of these transactions are then recorded in the account. Since any imbalance in one account automatically leads to an equal, but opposite, imbalance in the other, the balance of payments is always
Balance of Payments (Billions of dollars) Current Accounts U.S. merchandise exports +70 U.S. merchandise imports -67 Merchandise trade balance U.S. service exports U.S. service imports +70 Services balance +35 Goods and services balance +38 Net investment income from abroad -2 Net unilateral transfers -8 Current account balance Financial Accounts Change in U.S.-owned assets abroad Change in foreign-owner assets in the U.S. -40 +42 Financial account balance Statistical discrepancy -30 Trade balance Suppose an Argentine logging company purchases American-made chainsaws. This would be entered as a item under the section of the U.S. current account. According to the table, the United States is running a trade The current account balance suggests that U.S. current account transactions (exports and imports of goods and services, as well as inflow and outflow of investment income and transfers) created outpayments of foreign currencies from the United States that were the inpayments of foreign currencies to the United States. Any surplus or deficit in one account must be offset by deficits or surpluses in other balance-of-payments accounts. Because the current account is in , the excess of foreign currency held by Americans must either be loaned to foreigners or used to buy foreign stocks or bonds. All of these transactions are then recorded in the account. Since any imbalance in one account automatically leads to an equal, but opposite, imbalance in the other, the balance of payments is always
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Balance of Payments
(Billions of dollars)
Current Accounts
U.S. merchandise exports
+70
U.S. merchandise imports
-67
Merchandise trade balance
U.S. service exports
U.S. service imports
+70
Services balance
+35
Goods and services balance
+38
Net investment income from abroad
-2
Net unilateral transfers
-8
Current account balance
Financial Accounts
Change in U.S.-owned assets abroad
Change in foreign-owner assets in the U.S.
-40
+42
Financial account balance
Statistical discrepancy
-30
Trade balance
Suppose an Argentine logging company purchases American-made chainsaws. This would be entered as a
item under the
section of the U.S. current account.
According to the table, the United States is running a trade
The current account balance suggests that U.S. current account transactions (exports and imports of goods and services, as well as inflow and outflow
of investment income and transfers) created outpayments of foreign currencies from the United States that were
the inpayments of
foreign currencies to the United States.
Any surplus or deficit in one account must be offset by deficits or surpluses in other balance-of-payments accounts. Because the current account is in
, the excess of foreign currency held by Americans must either be loaned to foreigners or used to buy foreign stocks or bonds. All of
these transactions are then recorded in the
account. Since any imbalance in one account automatically leads to an equal, but opposite,
imbalance in the other, the balance of payments is always
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