Question

1.1 Below is a table containing the balance of payments accounts for a hypothetical economy. All figures are in $ billions. ROW = “The rest of the world.”

Complete the table by entering correct and consistent figures in the question mark boxes.

                                                                                                                       

1. CURRENT ACCOUNT      $ billions
Total receipts	629
Exports of goods and services	547
Primary income (Earned income)	?
Secondary income (Income transfers)	10
Total payments	?
Imports of goods and services	?
Primary income (Earned income)	95
Secondary income (Income transfers)	13
Balance on Current Account (CA)	?
2. CAPITAL ACCOUNT    $ billions
Transfers of assets from ROW	2
Transfers of assets to ROW	3
Balance on Capital Account (KA)	?
3. FINANCIAL ACCOUNT     $ billions
Net Sales of domestic assets to ROW	185
Net Purchases of foreign assets from ROW	120
Balance on Financial Account (FA)	?
4. DISCREPANCY (net errors & omissions)	−3

  

Answer 1

• There are total 6 missing figures.
• Each of missing figure is computed below. A separate ‘Ranking’ column is added to tell which ‘missing figure’ to solve first, the second and so on.
• Amount mentioned within “( )” denote figures with ‘minus’ sign
• Complete requirement:

1. CURRENT ACCOUNT      $ billions			Ranking as to solving for missing figures
Total receipts		$              629.00
Exports of goods and services	$                547.00
Primary income (Earned income)	$                   72.00		Fifth
Secondary income (Income transfers)	$                   10.00
Total payments		$              696.00	Fourth
Imports of goods and services	$                588.00		Sixth
Primary income (Earned income)	$                   95.00
Secondary income (Income transfers)	$                   13.00
Balance on Current Account (CA)		$              (67.00)	Third
2. CAPITAL ACCOUNT    $ billions
Transfers of assets from ROW	$                     2.00
Transfers of assets to ROW	$                     3.00
Balance on Capital Account (KA)		$                 (1.00)	Second
3. FINANCIAL ACCOUNT     $ billions
Net Sales of domestic assets to ROW	$                185.00
Net Purchases of foreign assets from ROW	$                120.00
Balance on Financial Account (FA)		$                 65.00	First
4. DISCREPANCY (net errors & omissions)		$                 (3.00)

---Working for above

1. CURRENT ACCOUNT      $ billions			Ranking as to solving for missing figures
Total receipts		629
Exports of goods and services	547
Primary income (Earned income)	=629-547-10		Fifth
Secondary income (Income transfers)	10
Total payments		=629+67	Fourth
Imports of goods and services	=696-95-13		Sixth
Primary income (Earned income)	95
Secondary income (Income transfers)	13
Balance on Current Account (CA)		=-65+1-3	Third
2. CAPITAL ACCOUNT    $ billions
Transfers of assets from ROW	2
Transfers of assets to ROW	3
Balance on Capital Account (KA)		=2-3	Second
3. FINANCIAL ACCOUNT     $ billions
Net Sales of domestic assets to ROW	185
Net Purchases of foreign assets from ROW	120
Balance on Financial Account (FA)		=185-120	First
4. DISCREPANCY (net errors & omissions)		-3