Numerical problem
Numerical problem
Balance of Payment
Here are some balance of payments data (without pluses and minuses):
Merchandise exports, 100
Merchandise imports, 125
Tourism exports, 90
Insurance imports, 80
Income receipts from abroad (profit – multinationals), 110
Income payments (interest payments) to foreigners, 150
Increase in home country´s ownership of assets abroad, 160
Increase in foreign ownership of assets in home countries, 200
Assuming that unilateral transfer equal zero, find the merchandise trade balance, net exports (services and income), the current account balance, the capital and financial account balance and the Official
Reserve Assets.
Solution:
Merchandise trade balance (or net exports goods):
+100 – 125=
Net exports services:
+ 90 – 80=
Net income from abroad (or net factor patments):
+ 110 – 150=
Current account balance: (- 25 + 10 – 40) - 55
Capital and Financial account balance:
+40 ( -160 + 200) + 15 + 55
Net holdings of reserve assets (decrease):
- 100 + 125 – 90 + 80 – 110 + 150 + 160 – 200 = +15
Since CA < 0 , country needs to finance its CA deficit. Must borrow from foreigners or sell to foreigners some of its assets.
- 25
+10
- 40
Balance of Payments Account of the U.S., 1998 (Billions of Dollars)
Current Account
• Net exports of goods and services (NX) - 164.3
Exports of goods and services 933.9
Goods
Services
Imports of goods and services
Goods
Services
670.2
263.7
- 917.2
- 181.0
- 1098.2
- 12.2
• Net income from abroad
Income receipts from abroad 258.3
Income payments to residents of other countries - 270.5
• Net unilateral transfers
Current Account Balance
- 44.1
- 220.6
Capital And Financial Account
• Capital Account
Net capital account transactions 0.6
•
Financial Account
Net financial flows 209.8
Increase in U.S. –owned assets abroad
(financial outflow ) - 292.8
U.S. official reserve assets
Other foreign assets
- 6.8
- 286.0
Increase in foreign-owned assets in U.S.
(financial inflow ) 502.6
Foreign official assets - 21.7
Other foreign assets 524.3
Capital and Financial Account Balance (KFA) 210.4
Statistical Discrepancy 10.1
Balance on goods (merchandise trade balance) = - 247.0
Balance on goods and services = - 164.3
Balance on goods, services, and income = - 176.5
Numerical problem
Balance of Payment
Here are some balance of payments data (without pluses and minuses):
Merchandise exports, 100
Merchandise imports, 125
Tourism exports, 90
Insurance imports, 80
Income receipts from abroad (profit – multinationals), 110
Income payments (interest payments) to foreigners, 150
Increase in home country´s ownership of assets abroad, 160
Increase in foreign ownership of assets in home countries, 200
Assuming that unilateral transfer equal zero, find the merchandise trade balance, net exports (services and income), the current account balance, the capital and financial account balance and the Official
Reserve Assets.
Solution:
Merchandise trade balance (or net exports goods):
+100 – 125=
Net exports services:
+ 90 – 80=
Net income from abroad (or net factor patments):
+ 110 – 150=
Current account balance: (- 25 + 10 – 40) - 55
Capital and Financial account balance:
+40 ( -160 + 200) + 15 + 55
Net holdings of reserve assets (decrease):
- 100 + 125 – 90 + 80 – 110 + 150 + 160 – 200 = +15
Since CA < 0 , country needs to finance its CA deficit. Must borrow from foreigners or sell to foreigners some of its assets.
- 25
+10
- 40
Balance of Payments Account of the U.S., 1998 (Billions of Dollars)
Current Account
• Net exports of goods and services (NX) - 164.3
Exports of goods and services 933.9
Goods
Services
Imports of goods and services
Goods
Services
670.2
263.7
- 917.2
- 181.0
- 1098.2
- 12.2
• Net income from abroad
Income receipts from abroad 258.3
Income payments to residents of other countries - 270.5
• Net unilateral transfers
Current Account Balance
- 44.1
- 220.6
Capital And Financial Account
• Capital Account
Net capital account transactions 0.6
•
Financial Account
Net financial flows 209.8
Increase in U.S. –owned assets abroad
(financial outflow ) - 292.8
U.S. official reserve assets
Other foreign assets
- 6.8
- 286.0
Increase in foreign-owned assets in U.S.
(financial inflow ) 502.6
Foreign official assets - 21.7
Other foreign assets 524.3
Capital and Financial Account Balance (KFA) 210.4
Statistical Discrepancy 10.1
Balance on goods (merchandise trade balance) = - 247.0
Balance on goods and services = - 164.3
Balance on goods, services, and income = - 176.5
Numerical problem
Balance of Payment
Here are some balance of payments data (without pluses and minuses):
Merchandise exports, 100
Merchandise imports, 125
Tourism exports, 90
Insurance imports, 80
Income receipts from abroad (profit – multinationals), 110
Income payments (interest payments) to foreigners, 150
Increase in home country´s ownership of assets abroad, 160
Increase in foreign ownership of assets in home countries, 200
Assuming that unilateral transfer equal zero, find the merchandise trade balance, net exports (services and income), the current account balance, the capital and financial account balance and the Official
Reserve Assets.
Solution:
Merchandise trade balance (or net exports goods):
+100 – 125=
Net exports services:
+ 90 – 80=
Net income from abroad (or net factor patments):
+ 110 – 150=
Current account balance: (- 25 + 10 – 40) - 55
Capital and Financial account balance:
+40 ( -160 + 200) + 15 + 55
Net holdings of reserve assets (decrease):
- 100 + 125 – 90 + 80 – 110 + 150 + 160 – 200 = +15
Since CA < 0 , country needs to finance its CA deficit. Must borrow from foreigners or sell to foreigners some of its assets.
- 25
+10
- 40
Balance of Payments Account of the U.S., 1998 (Billions of Dollars)
Current Account
• Net exports of goods and services (NX) - 164.3
Exports of goods and services 933.9
Goods
Services
Imports of goods and services
Goods
Services
670.2
263.7
- 917.2
- 181.0
- 1098.2
- 12.2
• Net income from abroad
Income receipts from abroad 258.3
Income payments to residents of other countries - 270.5
• Net unilateral transfers
Current Account Balance
- 44.1
- 220.6
Capital And Financial Account
• Capital Account
Net capital account transactions 0.6
•
Financial Account
Net financial flows 209.8
Increase in U.S. –owned assets abroad
(financial outflow ) - 292.8
U.S. official reserve assets
Other foreign assets
- 6.8
- 286.0
Increase in foreign-owned assets in U.S.
(financial inflow ) 502.6
Foreign official assets - 21.7
Other foreign assets 524.3
Capital and Financial Account Balance (KFA) 210.4
Statistical Discrepancy 10.1
Balance on goods (merchandise trade balance) = - 247.0
Balance on goods and services = - 164.3
Balance on goods, services, and income = - 176.5
