The following table contains data for the U.S. balance of payments in a prior year. Answer the question on the basis of this information. All figures are in billions of dollars. U.S. goods exports +$793
U.S. goods imports -1573
U.S. exports of service +280
U.S. imports of services -222
Net investment income +5
Net transfers -81
Capital account -5
Foreign purchases of assets in the U.S. +1198
U.S. purchases of foreign assets -395
Refer to the table above. There was a:

Question

Quizplus · Accepted Answer

A trade deficit occurs when the value of goods and services imported is greater than the value of goods and services exported. In this case, the U.S. has a trade deficit of -$780 billion (goods exports of +$793 billion minus goods imports of -$1573 billion equals -$780 billion). Additionally, a current account deficit occurs when there is a deficit in the balance of trade, net income, and net cash transfers. In this case, the U.S. has a current account deficit of -$897 billion (goods and services trade deficit of -$780 billion plus net investment income of +$5 billion minus net transfers of -$81 billion equals -$897 billion). Therefore, the correct answer is D - trade deficit and a current account deficit.

The Following Table Contains Data for the U