Question

Question 1: Construct the balance of payment table for Japan for the year 2010 which is comparable in format to Exhibit 3.1, page 66 (this page number from the version 6e, if you cannot find it, please let me know), to calculate the missing information data (Services; balance current account; balance on financial account; Statistical discrepancies). The table is provided on the second page. Please show your clearly calculation and explanation to support each number.

A summary of the Japanese Balance of Payments for 2000 (in $ billion)

	Credits	Debits
Current Account
(1) Exports	898.91
(1.1) Merchandise	615.81
(1.2) Services	117.30
(1.3) Factor income	165.80
(2) Imports		-717.72
(2.1) Merchandise		??
(2.2) Services		-135.56
(3.3) Factor income		-47.65
(3) Unilateral transfer	6.18	-16.85
Balance on current account	??
[(1) + (2) + (3)]
Capital Account
(4) Direct investment	-6.78	-50.17
(5) Portfolio investment	198.56	-71.04
(5.1) Equity securities	71.44	-25.04
(5.2) Debt securities	127.12	-46.00
(6) Other investment	-86.67	-91.00
Balance on financial account		??
[(4) + (5) + (6)]
(7) Statistical discrepancies		??
Overall balance	31.98
Official Reserve Account		-31.98

Question 2 : 1. Explain the following terms on the table

a] Merchandise trade

b] Trade balance

c] Service

d] Invisible trade

e] Factor income

f] Unilateral transfers

Answer 1

1. Explain the following terms on the table

a] Merchandise trade = Ans :- (-534.51)

"Goods which add or subtract from the stock of material resources of a country by entering (imports) or leaving (exports) its economic territory"

b] Trade balance = Ans :- (170.52)

"The balance of trade is also referred to as the trade balance or the international trade balance. A country that imports more goods and services than it exports in terms of value has a trade deficit. Conversely, a country that exports more goods and services than it imports has a trade surplus."

c] Service = Ans :- (-135.56)

"Any income earned by providing technical, consulting or other professional services as a part of their trade, profession or business is considered as service income".

d] Invisible trade = Ans :- (165.80)

"An invisible trade is an international transaction that does not include an exchange of tangible goods. Customer service outsourcing, overseas banking transactions, and the medical tourism industry all are examples of invisible trade"

e] Factor income = Ans :- (-47.65)

"Factor income is the flow of income that is derived from the factors of production—the general inputs used in the production of goods or services in order to make an economic profit. Factors of production include land, labor, and capital."

f] Unilateral transfers = Ans :- (-10.67)

"A unilateral transfer is a one-way transfer of money, goods, or services from one country to another. The prefix "uni" means one. In a unilateral transfer, one party is making a transfer to the other party. They are not receiving anything back from the other party."