Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Question
Chapter 5, Problem 1RQ
To determine
To explain:Transaction’s category that appears in current account, current account balance, relationship between net exports and current account balance.
Expert Solution & Answer
Explanation of Solution
The balance of payment account records all the transactions in the different accounts for instance, the current account records the transections related to merchandise, service, income and unilateral transfers accounts. However, the current account balance refers to the sum of all these transactions.
The current account balance and net export are positively related. If the value of net export is lower, then the value of the current account balance will also be lower. However, the negative value of net export will lead to a deficit in the current account balance.
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Students have asked these similar questions
Based on the Balance of Payments in the table below, what is the
statistical discrepancy (with positive or negative symbol)?
Balance of Payments
(1) Exports of goods and services
(2) Goods
(3) Services
(4) Imports of goods and services
(5) Goods
(6) Services
(7) Balance of goods and services
(8) Income receipts on investments
(9) Income payments on investments
(10) Unilateral transfers
(11) Current account balance
(in billions of dollars)
(12) U.S. owned assets abroad
(Change in; Increase is a "-".)
(13) Foreign-owned assets in U.S.
(Change in; Increase is a "+".)
(14) Net financial derivative transactions
(15) Financial account balance
(16) Statistical discrepancy
2,974
870
-2,400
-320
-980
260
20
1,420
-1,600
-250
Based on the Balance of Payments in the table below, what is the statistical discrepancy?
The following figure shows the Current Account Balance (similar to the Trade Balance) of Japan
(black line) and China (red line). During their growth periods (1980s for Japan and 2000s for
China), were these countries net savers or borrowers? What are some ways that the
governments intervened in the foreign exchange market to keep their BOP from adjusting
towards 0?
12.5
10.0
7.5
5.0
2.5
0.0
-5.0
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Source: Organization for Economic Co-operation and Development
fred.stlouisfed.org
US $, Sum Over Component Sub-periods/10000000O000
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