Answered: Here are data for the U.S. balance of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Here are data for the U.S. balance of payments in a given year. All figures are in billions of dollars. Answer all of the following:

a.The balance of trade in goods and services is $____billion.

Balance of trade= (1635+709)-(478+2371)= -505

b. The current account balance is $____billion.

Current account= (-505+218)= -287. (-287-124)= -411

c.The capital and financial account balance is $____billion.

Capital and financial account= (1044-632)=412. (412-1)=411

d. The overall balance of payments balance is $____ billion. Explain why this must be so.

balance of payments= -411+411= 0

Here's is the information table:

Foreign purchases of US assets - 632

Goods imports - 2,371

Service imports - 478

Net investment income +218

Service exports +709

Goods exports +1,635

Balance on the capital account -1

Net transfers -124

US purchases of assets abroad +1,044

Can you please check if my answer is correct and explain to me why answer d the overall balance of payments must be so?

Definition Definition Difference in value of a country's net exports and net imports for goods and services in a given period. A positive balance of trade is called a surplus and coincides with more net cash inflows into a country; a negative balance of trade deficit is a deficit and results in net cash outflows. A balance of trade surplus or deficit doesn't necessarily indicate a positive or negative situation for a country.

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