Question 46
MediumOriginal questionA 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 overall balance, and what happens to official reserves?
Show the answer and explanation
CorrectNot quiteAnswer B
Correct answer: B
Explanation
Overall balance = current account + capital account = -40 + 130 = $90 billion.
The surplus is added to official reserves.
Worth noting
$40 billion is the current account deficit alone; the capital inflow more than covers it.
- Concept
- Overall balance and reserves
- Typical timeTypical
- 70 s
- Your timeYours
- —
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