a.
Balance on goods= Goods exports - Goods imports
-11= 654- Good imports
Goods imports= 654+11= 665
Balance of payment account should be balanced. So if balance on current account is negative then the same balance on capital account should be in positive. That is
Balance of payment= Balance on current account + Balance on capital and financial account
Balance of payment balanced means:
0= Balance on current account + 12 billion
Balance on current account= -$12 billion
Balance on current account= Balance on goods + Balance on services+net investment income+net transfers
-12 = -11 + Balance on services+8+21
Balance on services= -12+11-8-21= -30
Balance on goods and services= Balance on goods + balance on services= -11-30= -41
Balance on services= exports of services-imports of services
-30 = exports of services-188
Exports of services= 188-30= 158
(1) Goods exports= 654
(2) Goods imports= -665
(3) Balance on goods= -11
(4) Exports of services= 158
(5) Imports of services= -188
(6) Balance on services= -30
(7) Balance on goods and services= -41
(8) Net investment income= 8
(9) Net transfers= 21
(10)Balance on current account= -$12 billion
b.
The country has a current account deficit.
Current account is deficit when negative items value is greater than the positive items value.
The current account for a fictitious country is shown in the table below. The balance on...
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