If SA has R25 billion in imports, R15 billion in exports, and sells R20 billion of assets to foreigners, how many foreign assets do domestic residents purchase?
A)R5 billion.
B)R10 billion.
C)R30 billion.
D)None of the above are correct.

Question

Quizplus · Accepted Answer

The balance of payments equation is: Current Account + Capital Account = 0. 
Given: Imports = R25 billion, Exports = R15 billion, Sale of Assets = R20 billion

Current Account = Exports - Imports 
= R15 billion - R25 billion 
= -R10 billion

Capital Account = Sale of Assets + Purchase of Assets 
0 = R20 billion + Purchase of Assets 
Purchase of Assets = -R20 billion 
(Note: Negative sign indicates money going out of the country, positive sign indicates money coming into the country)

So, the amount of foreign assets that domestic residents purchase is R20 billion, thus the answer is B)R10 billion.

If SA Has R25 Billion in Imports, R15 Billion in Exports