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Balance of Payments · Question 21 of 53

What is the current account balance?

Question 21

HardOriginal question

A country's international transactions in a year:

Item	$ billion
Exports of goods	300
Imports of goods	450
Exports of services	200
Imports of services	100
Net income from abroad	−20
Net transfers (remittances, gifts)	30
Net foreign direct investment	60
Net portfolio investment	40
Net external borrowing	30

What is the current account balance?

$−150 billion (a deficit)Correct answerYour answer$90 billion (a surplus)Correct answerYour answer$-40 billion (a deficit)Correct answerYour answer$110 billion (a surplus)Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

Balance of trade = 300 − 450 = -150; net invisibles = 110.
Current account balance = -150 + 110 = $-40 billion: a current account deficit.

Worth noting

$90 billion adds the capital account too, which gives the overall balance.

Concept: Current account balance
Typical timeTypical: 100 s
Your timeYours: —

The rule this testsThe current account

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