8. Looking at credits and debits The following table shows the value of credits

Question

8. Looking at credits and debits The following table shows the value of credits and debits in four balance-of-payments accounts in the fictional economy of Gamros. Complete the table by calculating the total values of credits and debits. Balance-of-Payments Accounts Merchandise Services Income Receipts Unilateral Transfers Total Values of Debits and Credits Debits (Billions of dollars) 550 $35 $20 $45 Credits (Billions of dollars) $40 520 $40 $15 Based on the total values of Gamros's debits and credits, there is into Gamros. This means that Gamros has a deficit in the money flowing out of Gamros to foreign countries than there is flowing account. Complete the following table based on the credits and debits presented in the previous table. (Hint: Use a negative sign to indicate a deficit.) Credit or Debit Term Equals the Value Oof (Billions of dollars) Balance of Trade Net Exports

Explanation / Answer

a. Total value of debit = 50 + 35 + 20 + 45 = $150.

Total value of credits = 40 + 20 + 40 +15 = $115.

b. More.

there is a deficit in the BOP account. Because the Debit > credit, so the money is flowing out of the economy.

c. Current Account.

All the components given in the table are a part of current account.

d. BOT => Merchandise credit - merchandise debit =>40 - 50 or -$10.

Net exports => merchandise & service credits - merchandise & service debits => (40+20) - (50+35) or -$25.

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