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

ID: 1194519 • Letter: 3

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? b) What is the value of capital account balance? c) What is the value of cash reserve account?

the current account balance is $25 millions

capital account balance is $12 millions

cash reserve account balance is $15 millions

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