Based on the following information from a balance of payments table,what is the balance on the financial account? Exports of goods and services = $5 billion
Imports of goods and services = $3 billion
Net income on investments = -$2 billion
Net transfers = -$2 billion
Increase in foreign holdings of assets in the United States = $4 billion
Increase in U.S.holdings of assets in foreign countries = -$1 billion
A)$3 billion
B)$2 billion
C)$1 billion
D)-$1 billion

Question

Quizplus · Accepted Answer

The financial account is the sum of the increase in foreign holdings of assets in the United States and the increase in U.S. holdings of assets in foreign countries. In this case, the increase in foreign holdings of assets in the United States is $4 billion and the increase in U.S. holdings of assets in foreign countries is -$1 billion, so the balance on the financial account is $4 billion - $1 billion = $3 billion.

Based on the Following Information from a Balance of Payments