The country of Pimm exports $500 billion worth of goods and services and imports $500 billion worth of goods and services. Net interest income paid abroad is $50 billion and net transfers are $0. The current account balance is

Question

Quizplus · Accepted Answer

The current account balance is calculated as the sum of the trade balance (exports minus imports), net income from abroad (such as interest and dividends), and net current transfers from abroad. In this case, the trade balance is $0 ($500 billion exports minus $500 billion imports), net interest income paid abroad is -$50 billion, and net transfers are $0. Therefore, the current account balance is $0 - $50 billion + $0 = -$50 billion. However, since none of the provided options is -$50 billion, and assuming a possible typo or misunderstanding in the interpretation of the question or options, the closest match under the assumption of seeking a positive balance or an oversight in the sign would be option A, $50 billion, but this technically represents a misunderstanding of the given values.

The Country of Pimm Exports $500 Billion Worth of Goods