MYECONLAB+ETEXT+KNAPP 104 STUDENT PACKET
MYECONLAB+ETEXT+KNAPP 104 STUDENT PACKET
6th Edition
ISBN: 9781323477816
Author: HUBBARD/KNAPP
Publisher: PEARSON C
Question
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Chapter 29, Problem 29.1.4PA
To determine

The net capital outflow or the inflow.

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In 2018, Germany had the world’s largest current account surplus of US$291 billion. Using this one piece of information, answer the following questions. a. Which was greater, the income Germans earned from abroad or incomes paid abroad from Germany? b. What is Germany’s financial account balance? Is it a surplus or deficit? c. Were financial inflows or financial outflows greater for Germany? d. Was total spending or total income greater in Germany in 2018?
Suppose that a nation has a current account deficit of 80 million dollars and a financial account surplus of 20 million dollars. How would the central banks’ foreign reserves change ?( Answer the question based on the assumption that there is no change in financial account). Now suppose that foreigners purchased 80 million worth of domestic assets. How would this affect the balance of payments accounts and central banks’ reserves?Please explain.
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