You are the economic advisor to the President. You must make a report of the U.S

Question

You are the economic advisor to the President. You must make a report of the U.S. balance of payments. Following is the date you have: (assume the statistical discrepancy is 0) Exports = $95 B Imports = $121B Income from US. Overseas Investments = $72B Outflow to Overseas Investors = $48B Unilateral Transfers into of the U.S. = $22B Unilateral Transfers out of the U.S. = $51B Foreign Purchase of U.S. Assets = $72B U.S. Purchase of Foreign Assets = $41B What is the balance of trade What is the net investment income What is the unilateral balance of transfer payments What is the capital account balance What is the balance of payments?

Explanation / Answer

A. Balance of Trade = Exports - Imports = 95 - 121 = -$26B

B. Net Investment Income = Income fron overseas - outflow to overseas = 72-48 = $24B

C.Unilateral balance of trasfer payments = unilateral payments into U.S. - unilateral payments out of U.S. = 22 - 51 = -$29B

D. Capital account balance = Foreign purchase of U.S. asset - U.S. purchase of foreign assets = 72-41 = $31B

E Balance of payments = Capital account balance+Unilateral balance of trasfer payments+Net Investment Income+balance of trade = 31-29+24-26 = 0

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