The table gives some information about U.S. intenational transactions in 2008 Bi

Question

The table gives some information about U.S. intenational transactions in 2008 Billions Item Imports of goods and services Foreign investment in the United Staters Exports of goods and services U.S, investment abroad Net interest income Net transfers Statistical of dollars s> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign. The current account balance is billion dollars. The capital and financial account balance is bilion dollars. The official settlements account balance is billion dollars U.S. official reserves are 2,561 955 1,853 300 121 -123 6

Explanation / Answer

Current Account Balance = (Exports – Imports) + net interest income + net transfers                                               = ($1853-$2561) + $121 - $123                                                = - 710 billion dollars Capital and financial account balance = Foreign investment in domestic country – Domestic country’s investment abroad + statistical discrepancy                               = $955-$300+$66 = 721 billion dollars Official reserves = Current account balance + capital and financial account balance                               = -710 + 721   = -11 billion dollars U.S. official reserves are net borrower as their own country’s investment exceeds the investment in abroad.

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