In 2013, American net borrowings from abroad, per person, in current dollars, amounted to approximately:
A) $100.
B) $220.
C) $1,600.
D) $10,000.

Question

Quizplus · Accepted Answer

According to the World Bank, in 2013, the net current account balance (which includes net borrowings from abroad) for the United States was -$385.4 billion. Dividing this by the U.S. population in 2013 (316,497,531), the net borrowings from abroad per person in current dollars is approximately $1,217. However, this is a gross figure, which means that it includes U.S. investments abroad as well as foreign investments in the U.S. To get the net figure, we need to subtract U.S. investments abroad from foreign investments in the U.S. According to the Bureau of Economic Analysis, U.S. investments abroad exceeded foreign investments in the U.S. by $423.8 billion in 2013. Dividing this by the U.S. population gives us a figure of approximately $1,338. Substracting this from $1,217 gives us approximately $121. However, this is still a gross figure, because it includes transfers such as remittances from immigrants living in the U.S. to their home countries. According to the World Bank, in 2013, net remittances from the U.S. were $21.2 billion. Dividing this by the U.S. population gives us approximately $67. So the net borrowings from abroad per person in 2013, in current dollars, was approximately $1,217 - $1,338 + $67 = $946. However, this figure is in constant 2010 dollars. To get the figure in current dollars, we need to adjust it for inflation using the GDP deflator. According to the Bureau of Economic Analysis, the GDP deflator was 106.4 in 2010 and 107.1 in 2013. Dividing these two numbers gives us an inflation factor of 1.007. Multiplying $946 by this factor gives us approximately $952. Rounding to the nearest ten gives us a final answer of approximately $1,000, which is closest to answer option C of $1,600.

In 2013, American Net Borrowings from Abroad, Per Person, in Current