27. Ruritania is calculating its balance of payments for the year. All transacti

Question

27. Ruritania is calculating its balance of payments for the year. All transactions for the year are listed below (all amounts are expressed in US dollars). a. Ruritania received weapons worth $200 from the US under its military program; no payment is necessary. b. A Ruritanian firm exported $400 of cloth. c. A Ruritanian resident is paid $10 in interest on a loan to a foreigner. d. Foreign tourists visited Ruritania and spent S100 in traveler's checks. e. Ruritanian investors invested $200 overseas and received S50 in interest on the investment that same year. f. A Japanese construction firm received a S150 installment payment for work done in Ruritania. A) Calculate Ruritania's current account (CA) and Financial Account (FA) balances. Briefly interpret the CA balance. B) What change in the official reserve (OR) account is implied such that the balance of payments balances? Interpret this change.

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