3 ) Given below is information on all of the entries in Balance of Payments of a

Question

3) Given below is information on all of the entries in Balance of Payments of a hypothetical developing country:

Commodity exports = $28 million

Debt service payments = $1 million

Remittances from abroad = $2

million Commodity imports = $34 million

Private FDI inflow = $0.5 million

Investment income = $1 million

Based on this information, answer the following questions:

a. What is the value of current account balance? (2 points)

b. What is the value of capital account balance? (2 points)

c. What is the value of cash reserve account? (1 point)

Explanation / Answer

Exports: = $28 million

Imports : = (-) $ 34 million

Remittances : = $2 million

= 30-34 = -$4 millions

(B) Capital account balance:

Debt service payments : = (-) $1 million

Private FDI inflow : = $0.5 milion

Investment income : = $1 milllion

= $0.5 million

(c) Cash reserve account = surplus capital account =$1 million

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.