Miami University Balance of Payments Discussion
Description
nstructions: The table below shows actual data of the U.S. current account. Please read Chapter 13 National and International Accounts: Income, Wealth, and the Balance of Payments (p. 475 – 480; 484 – 492; 495 – 497) and type up your answers to the following questions:.
- Please give an example of a transaction that will be recorded in line 10.
- “Primary income” in line 5 and line 13 refers to trade in factor services. Please give an example of a transaction that will be recorded in line 5.
- “Secondary income” in line 8 and line 16 refers to unilateral transfers. Please give an example of a transaction that will be recorded in line 16.
- How would you calculate trade balance? What is trade balance in 2017 and 2018, respectively?
- How would you calculate net factor income from abroad (NFIA)? What is NFIA in 2017 and 2018, respectively?
- Did the U.S. run a current account deficit or surplus in 2017 and in 2018? Why?
- Will budget deficits necessarily cause current account deficits? Use the current account identity to explain.
- Based on U.S. current account balances in 2017 and 2018, did the U.S. run a financial account deficit or surplus? Use the balance of payments identity to explain.
- Is the U.S. considered a net borrower or a net lender in both years? What does this mean for U.S. net holdings of external assets?
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