Numerical problem

Balance of Payment
Here are some balance of payments data (without pluses and
minuses):

Merchandise exports, 100

Merchandise imports, 125
Tourism exports, 90
Insurance imports, 80
Income receipts from abroad (profit – multinationals), 110
Income payments (interest payments) to foreigners, 150
Increase in home country´s ownership of assets abroad, 160
Increase in foreign ownership of assets in home countries, 200

Assuming that unilateral transfer equal zero, find the merchandise

trade balance, net exports (services and income), the current account
balance, the capital and financial account balance and the Official
Reserve Assets.
Solution:

Merchandise trade balance (or net exports goods):

+100 – 125= - 25
Net exports services:
+ 90 – 80= +10
Net income from abroad (or net factor patments):
+ 110 – 150= - 40

Current account balance: (- 25 + 10 – 40) - 55

Capital and Financial account balance:

+40 ( -160 + 200) + 15 + 55

Net holdings of reserve assets (decrease):

- 100 + 125 – 90 + 80 – 110 + 150 + 160 – 200 = +15

Since CA < 0 , country needs to finance its CA deficit. Must borrow

from foreigners or sell to foreigners some of its assets.
Balance of Payments Account of the U.S., 1998 (Billions of Dollars)
Current Account

• Net exports of goods and services (NX) - 164.3

Exports of goods and services 933.9
Goods 670.2
Services 263.7
Imports of goods and services - 1098.2
Goods - 917.2
Services - 181.0
• Net income from abroad - 12.2
Income receipts from abroad 258.3
Income payments to residents of
other countries - 270.5
• Net unilateral transfers - 44.1
Current Account Balance - 220.6
 Capital And Financial Account

• Capital Account
Net capital account transactions 0.6

• Financial Account
Net financial flows 209.8
Increase in U.S. –owned assets abroad
(financial outflow) - 292.8
U.S. official reserve assets - 6.8
Other foreign assets - 286.0
Increase in foreign-owned assets in U.S.
(financial inflow) 502.6
Foreign official assets - 21.7
Other foreign assets 524.3
Capital and Financial Account Balance (KFA) 210.4
Statistical Discrepancy 10.1
Balance on goods (merchandise trade balance) = - 247.0

Balance on goods and services = - 164.3

Balance on goods, services, and income = - 176.5

Numerical problem

Balance of Payment
Here are some balance of payments data (without pluses and
minuses):

Merchandise exports, 100

Merchandise imports, 125
Tourism exports, 90
Insurance imports, 80
Income receipts from abroad (profit – multinationals), 110
Income payments (interest payments) to foreigners, 150
Increase in home country´s ownership of assets abroad, 160
Increase in foreign ownership of assets in home countries, 200

Assuming that unilateral transfer equal zero, find the merchandise

trade balance, net exports (services and income), the current account
balance, the capital and financial account balance and the Official
Reserve Assets.
Solution:

Merchandise trade balance (or net exports goods):

+100 – 125= - 25
Net exports services:
+ 90 – 80= +10
Net income from abroad (or net factor patments):
+ 110 – 150= - 40

Current account balance: (- 25 + 10 – 40) - 55

Capital and Financial account balance:

+40 ( -160 + 200) + 15 + 55

Net holdings of reserve assets (decrease):

- 100 + 125 – 90 + 80 – 110 + 150 + 160 – 200 = +15

Since CA < 0 , country needs to finance its CA deficit. Must borrow

from foreigners or sell to foreigners some of its assets.
Balance of Payments Account of the U.S., 1998 (Billions of Dollars)
Current Account

• Net exports of goods and services (NX) - 164.3

Exports of goods and services 933.9
Goods 670.2
Services 263.7
Imports of goods and services - 1098.2
Goods - 917.2
Services - 181.0
• Net income from abroad - 12.2
Income receipts from abroad 258.3
Income payments to residents of
other countries - 270.5
• Net unilateral transfers - 44.1
Current Account Balance - 220.6
 Capital And Financial Account

• Capital Account
Net capital account transactions 0.6

• Financial Account
Net financial flows 209.8
Increase in U.S. –owned assets abroad
(financial outflow) - 292.8
U.S. official reserve assets - 6.8
Other foreign assets - 286.0
Increase in foreign-owned assets in U.S.
(financial inflow) 502.6
Foreign official assets - 21.7
Other foreign assets 524.3
Capital and Financial Account Balance (KFA) 210.4
Statistical Discrepancy 10.1
Balance on goods (merchandise trade balance) = - 247.0

Balance on goods and services = - 164.3

Balance on goods, services, and income = - 176.5

Numerical problem

Balance of Payment
Here are some balance of payments data (without pluses and
minuses):

Merchandise exports, 100

Merchandise imports, 125
Tourism exports, 90
Insurance imports, 80
Income receipts from abroad (profit – multinationals), 110
Income payments (interest payments) to foreigners, 150
Increase in home country´s ownership of assets abroad, 160
Increase in foreign ownership of assets in home countries, 200

Assuming that unilateral transfer equal zero, find the merchandise

trade balance, net exports (services and income), the current account
balance, the capital and financial account balance and the Official
Reserve Assets.
Solution:

Merchandise trade balance (or net exports goods):

+100 – 125= - 25
Net exports services:
+ 90 – 80= +10
Net income from abroad (or net factor patments):
+ 110 – 150= - 40

Current account balance: (- 25 + 10 – 40) - 55

Capital and Financial account balance:

+40 ( -160 + 200) + 15 + 55

Net holdings of reserve assets (decrease):

- 100 + 125 – 90 + 80 – 110 + 150 + 160 – 200 = +15

Since CA < 0 , country needs to finance its CA deficit. Must borrow

from foreigners or sell to foreigners some of its assets.
Balance of Payments Account of the U.S., 1998 (Billions of Dollars)
Current Account

• Net exports of goods and services (NX) - 164.3

Exports of goods and services 933.9
Goods 670.2
Services 263.7
Imports of goods and services - 1098.2
Goods - 917.2
Services - 181.0
• Net income from abroad - 12.2
Income receipts from abroad 258.3
Income payments to residents of
other countries - 270.5
• Net unilateral transfers - 44.1
Current Account Balance - 220.6
 Capital And Financial Account

• Capital Account
Net capital account transactions 0.6

• Financial Account
Net financial flows 209.8
Increase in U.S. –owned assets abroad
(financial outflow) - 292.8
U.S. official reserve assets - 6.8
Other foreign assets - 286.0
Increase in foreign-owned assets in U.S.
(financial inflow) 502.6
Foreign official assets - 21.7
Other foreign assets 524.3
Capital and Financial Account Balance (KFA) 210.4
Statistical Discrepancy 10.1
Balance on goods (merchandise trade balance) = - 247.0

Balance on goods and services = - 164.3

Balance on goods, services, and income = - 176.5