(25 points) You are provided with the following information about a country\'s i
ID: 1147196 • Letter: #
Question
(25 points) You are provided with the following information about a country's international transactions during a given year (in millions): Service exports Service imports Merchandise exports Merchandise imports Income flows, net Gifts to foreigners Increase in the country's holding of foreign assets, net $346 $354 $480 $348 $153 $142 $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
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
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