) The following are hypothetical data for the U.S. balance of payments. Use the
ID: 1100215 • Letter: #
Question
) The following are hypothetical data for the U.S. balance of payments. Use the data to calculate each of the following (assume credit balances):
a. Merchandise trade balance
b. Balance on goods and services
c. Balance on current account
d. Financial account balance
e. Statistical discrepancy
Billions of Dollars
Merchandise exports 350.0
Merchandise imports 2,425.0
Service exports 2,145.0
Service imports 170.0
Net income and net transfers 221.5
Outflow of U.S. capital 245.0
Inflow of foreign capital 100.0
Explanation / Answer
A.
Merchandise trade balance = Merchandise exports - Merchandise imports =350-2425 = -$2075 billion i.e. Merchandise trade balance is in deficit
B
Balance on goods and services = Merchandise exports + Service exports - Merchandise imports - Service imports = 350+170-2425-2145 = -$4050 billion i.e. trade balance is in deficit
C.
Current account balance = balance of trade + net income and net transfer = -4050 + 221.5
= -3828.5 i.e. current is in deficit by -3828.5 billion dollar
D
Capital account balance = Current account balance + Inflow of foreign capital - Outflow of U.S. capital = -3828.5 + 70
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