Everything else equal,if a country has exports of $12 billion and imports of $10 billion,it follows that the country has a current account balance of ________ and a financial account balance of ________.

Question

Quizplus · Accepted Answer

The current account balance is calculated as follows:

Current account balance = Exports - Imports

= $12 billion - $10 billion

= $2 billion

The financial account balance is calculated as follows:

Financial account balance = Capital inflows - Capital outflows

Since there is no information given about capital flows, we cannot determine the financial account balance. However, we know that in order to have a current account surplus (in this case, $2 billion), there must be a corresponding financial account deficit of the same amount. Therefore, the financial account balance is -$2 billion. Thus, choice B is the correct answer.

Everything Else Equal,if a Country Has Exports of $12 Billion