Balance of Payment (BOP): It is an account of what is received by residents of the country from the rest of the world and what these residents have paid out to other countries on account of sale of goods, services and other invisible items as well as on account of capital transfers from the other countries. It is divided into two accounts. Current Account: It maintains all the transactions related to the exchange of goods and services and unilateral transfers. It includes shipping insurance and banking services, investment income, foreign travel, transfer payments and balance of trade . Financial Account: It provides details of all the capital transfers such as investment and loans between one country and the rest world. Some components are banking capital, official capital, private capital and gold and foreign capital. Relation between Current Account and Financial Account: In an economy, sum of both current account and balance account is zero because they are balanced. The relation between them is: Balance of Trade (BOT): It is a type of merchandise balance. It refers to the difference between value of export and import. It highlights visible trade transaction with the rest of the world for a given year. When value of export is more than import the BOT is surplus, when value of import is more than export BOT is deficit and when both are equal then it is balanced. The formula to calculate BOT is: Here, BOT is balance of trade. V X is value of export. V M is the value of import.

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Answer 1

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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.

Chapter 34, Problem 4P

To determine

Balance of Payment (BOP):

It is an account of what is received by residents of the country from the rest of the world and what these residents have paid out to other countries on account of sale of goods, services and other invisible items as well as on account of capital transfers from the other countries. It is divided into two accounts.

Current Account: It maintains all the transactions related to the exchange of goods and services and unilateral transfers. It includes shipping insurance and banking services, investment income, foreign travel, transfer payments and balance of trade.

Financial Account: It provides details of all the capital transfers such as investment and loans between one country and the rest world. Some components are banking capital, official capital, private capital and gold and foreign capital.

Relation between Current Account and Financial Account: In an economy, sum of both current account and balance account is zero because they are balanced.
The relation between them is:

Balance of Trade (BOT): It is a type of merchandise balance. It refers to the difference between value of export and import. It highlights visible trade transaction with the rest of the world for a given year. When value of export is more than import the BOT is surplus, when value of import is more than export BOT is deficit and when both are equal then it is balanced.

The formula to calculate BOT is:

Here,

BOT is balance of trade.

V_Xis value of export.

V_M is the value of import.

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The figure below shows the hypothetical domestic supply and demand for baseball caps in the country of Spain. Domestic Supply and Demand for Baseball Caps Price (€ per cap) 10 9 8 7 6 5 4 3 2 1 0 Spain Dd 10 20 30 40 50 60 70 80 90 100 Baseball caps (thousands per month) Suppose that the world price of baseball caps is €2 and there are no import restrictions on this product. Assume that Spanish consumers are indifferent between domestic and imported baseball caps. Instructions: Enter your answers as whole numbers. a. What quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand b. What quantity of baseball caps will be imported? thousand Now suppose a tariff of €1 is levied against each imported baseball cap. c. After the tariff is implemented, what quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand d. After the tariff is implemented, what quantity of baseball caps will be imported? thousand

May I please have the solutions for the following assignment? as 2025

Answer 2

Question

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.

Chapter 34, Problem 4P

To determine

Balance of Payment (BOP):

It is an account of what is received by residents of the country from the rest of the world and what these residents have paid out to other countries on account of sale of goods, services and other invisible items as well as on account of capital transfers from the other countries. It is divided into two accounts.

Current Account: It maintains all the transactions related to the exchange of goods and services and unilateral transfers. It includes shipping insurance and banking services, investment income, foreign travel, transfer payments and balance of trade.

Financial Account: It provides details of all the capital transfers such as investment and loans between one country and the rest world. Some components are banking capital, official capital, private capital and gold and foreign capital.

Relation between Current Account and Financial Account: In an economy, sum of both current account and balance account is zero because they are balanced.
The relation between them is:

Balance of Trade (BOT): It is a type of merchandise balance. It refers to the difference between value of export and import. It highlights visible trade transaction with the rest of the world for a given year. When value of export is more than import the BOT is surplus, when value of import is more than export BOT is deficit and when both are equal then it is balanced.

The formula to calculate BOT is:

Here,

BOT is balance of trade.

V_Xis value of export.

V_M is the value of import.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

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.

Chapter 34, Problem 4P

To determine

Balance of Payment (BOP):

It is an account of what is received by residents of the country from the rest of the world and what these residents have paid out to other countries on account of sale of goods, services and other invisible items as well as on account of capital transfers from the other countries. It is divided into two accounts.

Current Account: It maintains all the transactions related to the exchange of goods and services and unilateral transfers. It includes shipping insurance and banking services, investment income, foreign travel, transfer payments and balance of trade.

Financial Account: It provides details of all the capital transfers such as investment and loans between one country and the rest world. Some components are banking capital, official capital, private capital and gold and foreign capital.

Relation between Current Account and Financial Account: In an economy, sum of both current account and balance account is zero because they are balanced.
The relation between them is:

Balance of Trade (BOT): It is a type of merchandise balance. It refers to the difference between value of export and import. It highlights visible trade transaction with the rest of the world for a given year. When value of export is more than import the BOT is surplus, when value of import is more than export BOT is deficit and when both are equal then it is balanced.

The formula to calculate BOT is:

Here,

BOT is balance of trade.

V_Xis value of export.

V_M is the value of import.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

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.

Chapter 34, Problem 4P

To determine