A country has imports of goods and services at $2,000 billion. The interest paid to the rest of theworld is $500 billion. The interest received from the rest of the world is $400 billion. The decrease in official reserves is $10 billion. The government sector balance is $200 billion, savings is $1,800
Billion, investment is $2,000 billion, and net transfers is zero. What is the current account balance?

Question

Quizplus · Accepted Answer

The current account balance is calculated as: Exports - Imports + Net income from abroad + Net transfers. Here, Imports = $2,000 billion, Net income from abroad = Interest received - Interest paid = $400 billion - $500 billion = -$100 billion, and Net transfers = $0. Therefore, the current account balance = 0 - $2,000 billion - $100 billion = -$2,100 billion. However, the problem seems to have a mistake in the options, as none directly match this calculation. The closest option considering the net income from abroad is -$100 billion.

A Country Has Imports of Goods and Services at $2,000