Macroeconomics (9th Global Edition)
9th Edition
ISBN: 9780134141534
Author: Andrew B. Abel, Ben Bernanke
Publisher: Pearson Global Edition
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Chapter 5, Problem 3RQ
To determine
Transactions which make current account and financial account balance equal to zero.
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The American company Boeing sells an airplane to a Japanese airline. As a result, the US current account decreases and the US dollar appreciates.
True or False.
A government finds itself in the following situation: a government budget deficit of $900; total domestic savings of $2000, and total domestic physical capital investment of $1300. According to the national saving and investment identity, if investment increases by $200 while the government budget deficit decreases by $100 and savings remain the same, what will happen to the current account balance?
Which of the following transactions is included in the current account balance of the BOP statement
a.
Foreign direct investment
b.
Portfolio investment
c.
External commercial borrowings
d.
Dividends earned on portfolio investment
Chapter 5 Solutions
Macroeconomics (9th Global Edition)
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- What is included in the current account balance?arrow_forwardIn 2001, the United Kingdom's economy exported goods worth £192 billion and services worth another £77 billion. It imported goods worth £225 billion and services worth £66 billion. Receipts of income from abroad were £140 billion while income payments going abroad were £131 billion. Government transfers from the United Kingdom to the rest of the world were £23 billion, while various U.K government agencies received payments of £16 billion from the rest of the world. Calculate the U.K. merchandise trade deficit for 2001. Calculate the current account balance for 2001.arrow_forwardWhich of the following is included in a nation's current account? a) Purchases of foreign assets b) Borrowings from abroad c) Foreign purchases of U.S. financial assets d) Investment income receipts e) Purchases of foreign real propertyarrow_forward
- Explain how changes in various economic factors affect a country's current account balance.arrow_forwardWould each of the following groups be happy or unhappy if the U.S. dollar appreciated? Australian tourists planning a trip to the U.S. An American firm trying to purchase property overseas.arrow_forwardWhich of the following would most likely be included in the positive side of the U.S. current account balance? a. U.S. foreign aid sent to as disaster relief to Haiti b. interest payments to foreign investors invested in the U.S. c. money earned by U.S. firms in Europe d. money spent by U.S. tourists in Europearrow_forward
- What is the meaning of a surplus (deficit) on the current account balance? What economic transactions give rise to the receipt of dollars from foreigners? What transactions give rise to payments to foreigners?arrow_forwardA surplus on the current account of the balance of payments indicates that: (1) Financial inflows are less than financial outflows;(2) Imports are greater than exports;(3) Financial inflows are greater than financial outflows;(4) Exports are greater than importsarrow_forwardThe balance of payments of a country on current account is equal to ___________. Select one: a. balance of trade plus short term b. balance of trade plus net invisible exports c. balance of invisible trade plus imports d. balance of payment minus capital flowsarrow_forward
- Given the following information: Unilateral transfers: $120 billion, Exports in goods: $1,000 billion, Exports in services: $500 billion, Imports in goods: $1,400 billion, Imports in services: $300 billion, Income received by U.S. investors on foreign stocks and bonds: $600 billion, Income received by foreign investors on U.S. assets: $500 billion, what is the current account balance?arrow_forwardThe Current Account DOES NOT include: a. Portfolio Investment b. Net income investments in other countries c. Payments in connection with foreign trade. d. Interest on loans to other countries.arrow_forwardA trade balance can be quickly defined as the gap between ___________ , which are also included in the current account balance along with ___________ . a) supply and demand; stocks and bonds b) exports and imports; stocks and bonds c) exports and imports; investment income and unilateral transfers d) supply and demand; investment income and unilateral transfersarrow_forward
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