Question

US Billions USD
Increase in foreign holdings of US assets 84
Increase in US holdings of foreign assets 82
Statistical Discrepancy 32
Current Account Balance
Refer to the above table. The Current Account Balance =

Answer 1

Financial account balance should be calculated first:

Financial account balance (FAB) = Increase in foreign holding (Sale) – Increase in US holding (Purchase)

                                        = 84 – 82

                                      = $2 Billion

Hence,

Current account balance = FAB – Statistical discrepancy

                                    = 2 – 32

                                    = - $30 Billion (Answer)