D2) Economics Consider that a country's capital account balance has a $10 million deficit, and its current account has a $240 million surplus. What will its financial account balance have? $230 million deficit $230 million surplus $200 million deficit $170 million deficit $170 million surplus
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- How did large trade deficits hurt the East Asian countries in the mid 1980s? (Recall that trade deficits are equivalent to inflows of financial capital from abroad.)11. Assuming that all transactions are recorded, if the United States has an overall deficit (–) in itscurrent account, what is the implication for the balances of the other accounts (capital and financial)? a. When added (FA + KA), they must be in surplus (+) by exactly the same amount.b. Their difference (FA – KA) is equal to the deficit (–) in the current account. c. When added (FA + KA), they will be in deficit by exactly the same amount. d. Their difference (FA – KA) must be equal to zero.Everything else equal, if a country has exports of $15 billion and imports of $16 billion, it follows that the country has a ________. current account deficit and a financial account deficit current account surplus and a financial account deficit current account surplus and a financial account surplus current account deficit and a financial account surplus
- Australia has a current account surplus of $3 billion per quarter and a net income deficit of $3 billion per quarter. Which of the following is TRUE? a. The trade surplus is $6 billion per quarter b. The capital account deficit is $6 billion per quarter c. Net foreign liabilities are increasing d. All the other optionsYou have the following annual figures for the New Zealand economy. Investment expenditure $42.5 billion Government savings -$1.7 billion The current account balance is not zero. In fact the current account deficit is $6.0 billion. What is New Zealand's actual private sector savings figure? $____billion (use 1 d.p.).Question 3Explain why a country can have a large trade deficit combined with a current account surplus. In explaining this, provide at least three transactions in the current account besides imports and exports. Explain how current transactions listed in this year’s capital account have implications for transactions in the current account in future years. Provide at least three examples. Suppose that a country has a current account deficit. Explain the three ways in which that deficit can be offset.
- A country finds itself in the following situation: a government budget deficit of $1200; total domestic savings of $400, and total domestic physical capital investment of $1300. According to the national saving and investment identity, if investment decreases by $300 while the government budget deficit and savings remain the same, what will be the new value of the trade deficit after investment decrease?Net exports and net capital outflow: 1. Which of the following statements about a country with a trade deficit is not true? Why? A. exports < imports B.net capital outflow < 0 C.investment < savingA country finds itself in the following situation: a government budget deficit of $2400; total domestic savings of $900, and total domestic physical capital investment of $1300. According to the national saving and investment identity, if investment decreases by $600 while the government budget deficit and savings remain the same, what will be the new value of the trade deficit after investment decreases?
- Assume that the following details apply to the U.S. economy: Government budget deficit: $150 billion. Domestic Savings: $2,000 billion Domestic physical capital investment: $2,500 billion According to the national saving and investment identity, what will be the current account balance? A) $2,000 billion B) $2,650 billion C) $2,150 billion D) $650 billionExports of goods and services 1,872 Imports of goods and services 2,375 Net unilateral transfers -99 Net Investment Income 170 Capital Account -7 Net US acquisition of financial assets 958 Net US incurrence of liabilities 1,391 Net financial derivatives -14 Based on the table above, the balance on the current account is Group of answer choices 673 503 -432 -447 -50358.When countries have severe balance of payments difficulties caused by unsustainable current account deficits, they can approach the International Monetary Fund (IMF) for assistance. In providing financial assistance, the IMF generally insists that the country implement a series of policy changes designed to reduce the deficit. These programs are controversial as they tend to focus on demand reduction. Explain why demand reduction would solve a current account deficit problem. Would a program designed to increase the nation’s GDP growth rate be a method of reducing a current account deficit? Why or why not?