Consider the balance-of-payments accounting information for Lalaland in 2018 as shown in the table below.All values are in billions of dollars and any variables not provided below have a value of zero. TABLE 34-1 Refer to Table 34-1.What is the net capital flow between Lalaland and the rest of the world in 2018?

Question

Consider the balance-of-payments accounting information for Lalaland in 2018 as shown in the table below.All values are in billions of dollars and any variables not provided below have a value of zero.  TABLE 34-1 Refer to Table 34-1.What is the net capital flow between Lalaland and the rest of the world in 2018?

Quizplus · Accepted Answer

The net capital flow is equal to the change in the foreign exchange reserves, which is calculated as the current account balance plus the capital and financial account balance. In Lalaland's case, the current account balance is -$20 billion and the capital and financial account balance is -$70 billion, for a total of -$90 billion. This means there was a net capital outflow of $90 billion from Lalaland to the rest of the world in 2018.

Consider the Balance-Of-Payments Accounting Information for Lalaland in 2018 as Shown