Question

3) The following table contains the U.S. totals for key international transactions in 2008, in billions of dollars. (20p)
Line (Credits +; debits -)
2 Exports of goods and services +$1,827
12 Income receipts +765
19 Imports of goods and services -2,523
29 Income payments -646
35 Unilateral current transfers, net -128
39 Capital account transactions, net +1
Financial Outflows:
41 U.S. official reserve assets -5
46 U.S. government assets, other than official reserve assets -530
50 U.S. private assets, net +534
Financial Inflows:
56 Foreign official reserve assets in the U.S. +487
63 Other foreign assets in the U.S. +47
a) Calculate the Balance on Current Account, and the Statistical Discrepancy.

b) Calculate the Official Settlements Balance.

c) In 2008, U.S. GDP was $14,441 billion. How much was Gross National Expenditure? How much was Gross National Disposable Income?

Answer 1

Answer to a-

Balance on current account is calculated by adding country's trade balance to the net income and direct payments.

Please see the below calculation

Current account	Particulars	Credit (+), debit (-)
1	Export of good, service	1827
12	Income receipts	765
19	Import of goods, service	-2523
29	Income payment	-646
35	Unilateral transfer, net	-128
	Current account balance	-705

The value is negative, thus, it is current account deficit

Now, Statistical Descrepancy is calculated using the sum of all the transactions given above with reverse sign

Statistical descrepancy -

Current Account	Debit(-), Credit(+)	Values with reversed sign
Export of goods and services	$1,827	($1,827)
Income receipts	$765	($765)
Imports of goods & services	($2,523)	$2,523
Income payments	($646)	$646
Unilateral current transfer	($128)	$128
Capital account transactions, net	$1	($1)
Financial outflows
US official reserve assets	($5)	$5
US government assets	($530)	$530
US private assets, net	$534	($534)
Financial Inflows
Foreign Official reserve assets in US	$487	($487)
Other foreign assets in the US	$47	($47)
Total Statistical Descrepancy		$171

Answer to b) Official Settlement Balance is the difference between Current Account Balance and Capital & Financial account Balance.

Capital & Financial account balance = +1 -5 -530 + 534 + 487 + 47 = +$534

Current Account balance already calculated as -$706

Therefore, Official Settlement Account = -706 + 534 = -$172