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A) Balance of Trade

Economics

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Answers

4 parts
a

\12,000.00$

b

\33,800.00$

c

-\28,000.00$

d

\5,800.00$

Step-by-step solution

9 steps

Here are the calculations for the balance of payments for Country A:

Part a· 2 steps

**Balance of Trade

The balance of trade refers to the difference between visible exports (merchandise receipts) and visible imports (merchandise payments).

  1. Identify merchandise receipts and payments.

    Merchandise Receipts = $52,000.00 Merchandise Payments = $40,000.00

  2. Calculate the balance of trade.

    Balance of Trade=Merchandise Receipts−Merchandise Payments\text{Balance of Trade} = \text{Merchandise Receipts} - \text{Merchandise Payments}

    Balance of Trade=$52,000.00−$40,000.00\text{Balance of Trade} = \$52,000.00 - \$40,000.00 Balance of Trade=$12,000.00\text{Balance of Trade} = \$12,000.00 The balance of trade is \boxed{\12,000.00}$.

Part b

\33,800.00$

**Balance of Current Account

The current account includes the balance of trade, balance of services, net investment income, and net unrequited transfers.

  1. Calculate the net for each component of the current account.

    • Merchandise: \52,000.00 - $40,000.00 = $12,000.00$
    • Shipping & other invisibles: \4,000.00 - $8,000.00 = -$4,000.00$
    • Investment income: \20,000.00 - $5,000.00 = $15,000.00$
    • Other services: \2,500.00 - $7,500.00 = -$5,000.00$
    • Unrequited transfer: \22,800.00 - $7,000.00 = $15,800.00$

  2. Sum the net balances of all current account components.

    Balance of Current Account=$12,000.00+(−$4,000.00)+$15,000.00+(−$5,000.00)+$15,800.00\text{Balance of Current Account} = \$12,000.00 + (-\$4,000.00) + \$15,000.00 + (-\$5,000.00) + \$15,800.00 Balance of Current Account=$12,000.00−$4,000.00+$15,000.00−$5,000.00+$15,800.00\text{Balance of Current Account} = \$12,000.00 - \$4,000.00 + \$15,000.00 - \$5,000.00 + \$15,800.00 Balance of Current Account=$33,800.00\text{Balance of Current Account} = \$33,800.00 The balance of current account is \boxed{\33,800.00}$.

Part c

-\28,000.00$

**Balance on Capital Account

The capital account includes direct investment, other long-term capital, and short-term capital.

  1. Calculate the net for each component of the capital account.

    • Direct investment: \50,000.00 - $26,000.00 = $24,000.00$
    • Other long-term capital: \254,000.00 - $289,000.00 = -$35,000.00$
    • Short-term capital: \221,000.00 - $238,000.00 = -$17,000.00$

  2. Sum the net balances of all capital account components.

    Balance on Capital Account=$24,000.00+(−$35,000.00)+(−$17,000.00)\text{Balance on Capital Account} = \$24,000.00 + (-\$35,000.00) + (-\$17,000.00) Balance on Capital Account=$24,000.00−$35,000.00−$17,000.00\text{Balance on Capital Account} = \$24,000.00 - \$35,000.00 - \$17,000.00 Balance on Capital Account=−$28,000.00\text{Balance on Capital Account} = -\$28,000.00 The balance on capital account is \boxed{-\28,000.00}$.

Part d

\5,800.00$

**Balance of Payment

The overall balance of payments is the sum of total receipts minus total payments.

  1. Calculate total receipts.

    Total Receipts=$52,000+$4,000+$20,000+$2,500+$22,800+$50,000+$254,000+$221,000\text{Total Receipts} = \$52,000 + \$4,000 + \$20,000 + \$2,500 + \$22,800 + \$50,000 + \$254,000 + \$221,000 Total Receipts=$626,300.00\text{Total Receipts} = \$626,300.00

  2. Calculate total payments.

    Total Payments=$40,000+$8,000+$5,000+$7,500+$7,000+$26,000+$289,000+$238,000\text{Total Payments} = \$40,000 + \$8,000 + \$5,000 + \$7,500 + \$7,000 + \$26,000 + \$289,000 + \$238,000 Total Payments=$620,500.00\text{Total Payments} = \$620,500.00

  3. Calculate the balance of payment.

    Balance of Payment=Total Receipts−Total Payments\text{Balance of Payment} = \text{Total Receipts} - \text{Total Payments}

    Balance of Payment=$626,300.00−$620,500.00\text{Balance of Payment} = \$626,300.00 - \$620,500.00 Balance of Payment=$5,800.00\text{Balance of Payment} = \$5,800.00 The balance of payment is \boxed{\5,800.00}$.

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