1-You are provided with the following information about a country\'s internation

Question

1-You are provided with the following information about a country's international transactions during a given year (in millions):

Service exports $346
Service imports $354
Merchandise exports $480
Merchandise imports $348
Income flows, net $153
Gifts to foreigners $142
Increase in the country’s holding of foreign assets, net $352
(excluding official reserves assets)
Increase in foreign holdings of the country’s assets, net $252
(excluding official reserves assets)
Statistical discrepancy, net credit $154

Calculate the official settlements balance and the current account balance.
Is the country increasing or decreasing its net holdings of official reserve assets? Why?

Explanation / Answer

Answer:

Current account balance includes only income flows and gifts to foriegners=153-142=11

Official settlement balance=increase in country holding of foreign assets - increase in foreign holding of country's assets=352-252=100

Note exports and imports are parts of trade balance only

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

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