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

Question

Quizplus · Accepted Answer

The current account balance is equal to exports minus imports plus net income from assets abroad. In this case, exports ($950 billion) minus imports ($1,000 billion) gives a deficit of $50 billion. However, purchases of foreign assets by Grovner's citizens ($900 billion) must be subtracted to get the final current account balance of a surplus of $50 billion (B).

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