Excercise 4 The table shows the international transactions of Tulip Island last
ID: 2429299 • Letter: E
Question
Excercise 4 The table shows the international transactions of Tulip Island last year. Item Exports of Goods and Services Imports of Goods and Services Dividends paid to the rest of the world Dividends received from the rest of the world Purchases of debt issued by the rest of the world Purchases of Tulip lsland debt by residents of the monetary unit 500 400 100 50 35 25 400 300 rest of the world Gifts to the residents of the rest of the world Gifts from the rest of the world a) The current account balance iS b) The capital account balance is c) The official reserve transaction account balance is_,Explanation / Answer
A) Current account balance = Exports of goods and services + gifts from the rest of the world +divident received from rest of the world - Divident paid to the rest of the world - import of goods and services - gifts to the rest of the world
Current account balance =500+50+300-400-100-400=-50
B) Capital account balance = purchase of tulip Island debt by the resident's of rest of world - purchase of debt issued by the rest of the world
Capital account balance =25-35=-10
3) Official reserve transaction account balance cannot be calculated since no other balances are given.
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