ECON MACRO
ECON MACRO
5th Edition
ISBN: 9781337000529
Author: William A. McEachern
Publisher: Cengage Learning
Question
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Chapter 18, Problem 1.1P
To determine

(a)

To calculate:

The merchandise trade balance by using the given data.

Concept Introduction:

The periodical evaluation of trade balance, i.e., the difference in the value between the imports and exports is known as Merchandise Trade Balance. The evaluation is performed on monthly and yearly basis.

Expert Solution
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Explanation of Solution

Merchandise Trade Balance = Merchandise Export  Merchandise Import

= $350  $2425    = $2,075

Here, the merchandise trade balance is -$2,075 billion. The negative balance indicates a trade deficit.

To determine

(b)

To calculate:

The balance on goods and services.

Expert Solution
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Explanation of Solution

Balance on Goods and Services = Export of Goods and Services  Import of Goods and Services Export of Goods and services = $350 + $2145 = $2495

Import of Good and services = $2425 + $170=$2595

Balance on Goods and Services = $2495$2595=$100

Here, the balance on goods and services is -$100 billion. The negative balance indicates a trade deficit.

To determine

(c)

The balance on current account by using the given data.

Expert Solution
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Explanation of Solution

Balance on Current Account = Net Income Transferred  Inflow of Foreign Currency

 = $221.5  $100.0= $121.5

Here, the balance on current account is $121.5 billion.

To determine

(d)

The financial account balance using the given data.

Expert Solution
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Explanation of Solution

Financial Account Balance = Capital Inflow  Capital Outflow = 100.0  245.0= $145.0

Here, the financial account balance is -$145.0 billion. The negative balance indicates a trade deficit.

To determine

(e)

The statistical discrepancy using the given data.

Expert Solution
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Explanation of Solution

Statistical Discrepancy = Capital Outflow  Net Income Transferred                                        = 245.0  221.5                                       = $23.5

Here, the statistical discrepancy is $23.5 billion.

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Students have asked these similar questions
The table below contains 2014 balance of payments accounts for Germany (in billions of Euros). Calculate the merchandise trade balance, the balance on goods and services, and the current account balance. Exports of goods services and income receipts (credits) 2,095 Exports of goods and services 1,756 Goods 1,479 Services 277 Primary income receipts 259 Secondary income receipts 78 Imports of goods services and income payments (debits) 1,814 Imports of goods and services 1,510 Goods 1,179 Services 330 Primary income payments 171 Secondary income payments 132     Merchandise trade balance (balance on goods)       Balance on goods and services       Current account balance
U.S. goods exports +$ 390 U.S. goods imports - 520 U.S. service exports +145 U.S. service imports -107 Net investment income +12 Net transfers -22 Capital account -5 Foreign purchases of U.S. assets +156 U.S. purchases of foreign assets -49 The accompanying table contains hypothetical data for the U.S. balance of payments in a year. All figures are in billions of dollars. The balance on the financial account was a A. $107 billion surplus. B. $102 billion surplus. C. $107 billion deficit. D. $102 billion deficit.
Balance of Payments (Billions of dollars) Current Accounts U.S. merchandise exports +70 U.S. merchandise imports -67 Merchandise trade balance U.S. service exports U.S. service imports +70 Services balance +35 Goods and services balance +38 Net investment income from abroad -2 Net unilateral transfers -8 Current account balance Financial Accounts Change in U.S.-owned assets abroad Change in foreign-owner assets in the U.S. -40 +42 Financial account balance Statistical discrepancy -30 Trade balance Suppose an Argentine logging company purchases American-made chainsaws. This would be entered as a item under the section of the U.S. current account. According to the table, the United States is running a trade The current account balance suggests that U.S. current account transactions (exports and imports of goods and services, as well as inflow and outflow of investment income and transfers) created outpayments of foreign currencies from the United States that were the inpayments of…
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