In 2012 country XYZ has a current account deficit of $1000 million and a non-res

Question

In 2012 country XYZ has a current account deficit of $1000 million and a non-reserve financial account surplus of $750 million. XYZ's capital account is in a $100 million surplus. In addition, XYZ factories located in foreign countries earn $700 million. XYZ has a trade deficit of $800 million. Assume XYZ neither gives nor receives unilateral transfers.

a)What is the balance of the finance account in 2012? What happened to XYZ's net foreign assets during the year?Did it acquire or lose foreign assets during the year?

b)Compute the official settlements balance.Based on this number, what happened to the central bank's(foreign)reserves?

c)Compute net factor income from board.

d)How much income did foreign factors of production earn in XYZ during 2012?

Explanation / Answer

http://www2.econ.iastate.edu/classes/econ457/rksingh/sp2012/problems/AnswersHW2.pdf

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