Suppose Townsend's exports equal $1,000 billion, its imports equal $950 billion, and Jpurchases of foreign assets by its citizens equals $900 billion. What is Townsend's balance on its current account?

Question

Quizplus · Accepted Answer

Current account balance = Exports - Imports = $1,000 billion - $950 billion = $50 billion. The purchase of foreign assets by citizens (capital account) is not included in the calculation of the current account balance.

Suppose Townsend's Exports Equal $1,000 Billion, Its Imports Equal $950