Question

1. Transactions between the US and the rest of the world are shown below. Use the following information to answer the next four questions.

   1. US citizens spend 50 million dollars visiting China.
   2. American companies sell 30 million dollars worth of stock to foreign investors.
   3. US citizens receive 10 million dollars worth of dividend payments from foreign corporations.
   4. US government buys 5 million dollars worth of bonds.
   5. American citizens purchase 35 million dollars worth of Japanese produced vehicles.
   6. US government buys 18 million dollars worth of gold.
   7. Ford sells 80 million dollars worth of cars overseas.
   8. US corporations receive 4 million dollars in interest from foreign corporations.
   9. US citizens send 16 million dollars in disaster relief to Haiti.

   Find the US balance of trade (in millions of dollars).

   		- 7
   		45
   		19
   		None of the above

6.25 points   

QUESTION 3

1. Find the capital account balance (in millions of dollars).

   		25
   		21
   		3
   		5

6.25 points   

QUESTION 4

1. Find the current account balance (in millions of dollars).

   		18
   		-7
   		9
   		- 5

6.25 points   

QUESTION 5

1. Find the official reserve account balance

   		$18 million
   		-$18 million
   		-$23 million
   		$23 million

Answer 1

Question-2 (Balance of trade)

Balance of grade refers to the difference between a country's value of export and value of Imports.

Balance of trade = Value of Exports-Value of Imports.

Exports	Amount(Million$)
Ford sells 80 million dollars worth of cars overseas.	80
Imports
American citizens purchase 35 million dollars worth of Japanese produced vehicles.	35
Balance Of Trade	45

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Question-3(Capital Account Blance)

Capital account Balance represents Net changes in the Country's asset and liabilities during a year.

Particulars	Amount(Million$)
American companies sell 30 million dollars worth of stock to foreign investors.	30
Less:-
US government buys 5 million dollars worth of bonds.	5
Capital Account Balance	25

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Question-4 (Current account balance)

Current account balance includes all the transactions(Other than financial items) that involves economic values.

Particulars	Amount(Million$)
US citizens receive 10 million dollars worth of dividend payments from foreign corporations.	10
Ford sells 80 million dollars worth of cars overseas.	80
US corporations receive 4 million dollars in interest from foreign corporations.	4
Less-
US citizens spend 50 million dollars visiting China.	50
American citizens purchase 35 million dollars worth of Japanese produced vehicles.	35
US citizens send 16 million dollars in disaster relief to Haiti.	16
Current account balance	-7

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Question -5

Official reserve account records the reserve of foreign currency, securities , gold and trasferable rights with the Central Bank.

Particulars	Amount(Million$)
US government buys 5 million dollars worth of bonds	5
US government buys 18 million dollars worth of gold.	18
Official Reserve account balance	23