Need help with bottom 5% MINDTAP Homework (Ch 10) 6. Looking at credits and debi

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Need help with bottom 5% MINDTAP Homework (Ch 10) 6. Looking at credits and debits The following graph represents the value of credts and debits in four balance-of-payments accounts in the economy of Moraha. Blue bers (the right-hand bar in each category) represent debits, and orange bars represent credits. Use the graph to help you answer the following questions PRICE ?Billions of dollars 100 80 70 50 20 Merch. Services Income Unlateral You can see from the graph that the total value of Moraha's debits is greater than the value of its credits, and there is more money fowing out of Moraha to foreign countries than there is flowing into Morahs This meens that Morahs has a defict in the uentaccount Complete the following table based on the credits and debits presented on the graph. If you are indicating a defict, be sure to use a negative sign. Credit or Debit (Billions of dollars) Term Equals the Value of Current account balance Balance of trade Sum of credits-Sum of debits Merch. and service credits- Merch and service debits Cannot be valued in terms of the listed accounts Merchandise debits - Merchandise credts Sum of debits Sum of credits Merchandise credits- Merchandise debits ? 2010-gga uaning empt i Merchand service debits-Merch, and service credits Continue without

Explanation / Answer

You can see from the graph ....

- greater

- more

- current.

Explaination :

As we can see the graph, we can calculate the current account balance

Current Account balance = Exports (credits) - imports (debits) of merchandise + Export (credit) - Imports (debit) of services + Net unilateral transfers from rest of the world + Net Income recipt from rest of world.

Put values, of these variables from the graph

Current account balance = 35 - 80 + 30 - 20 + 10 - 5 + 15 - 25 = -40 bilions

As we can see that debits are moe than credits by 50 billions so the first fill ups is greater, that Moraha's debit is more than the value of its credits.

- second fill up is more, it is so because debits ( imports) are more than credits (exports) it means more outflow of money than inflow.

- third fill up is current account, because the total value of Moraha's debits are more than its credit so there will be deficit in current account.

Current account balance = Sum of credits - sum of debits , debit of 40 billions ( as we calculate above)

Balance of trade = Merchandise credit - Merchandise debit

Put value,

Balance of trade = 35 - 80 = - 45 billion.

Debit of 45 billion

Term Equals value of Credit or Debit ( Billions of dollars) Current account balance Sum of credits - sum of debits - 40 Balance of trade Merchandise credit - Merchandise debit -45

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