Based on the following information from a balance of payments table,what is the balance on the financial account? Exports of goods and services = $12 billion
Imports of goods and services = $14 billion
Net income on investments = -$4 billion
Net transfers = -$1 billion
Increase in foreign holdings of assets in the United States = $5 billion
Increase in U.S.holdings of assets in foreign countries = -$3 billion
A)$8 billion
B)$2 billion
C)$1 billion
D)-$1 billion

Question

Quizplus · Accepted Answer

The balance on the financial account is calculated by considering the changes in foreign and domestic asset holdings. The increase in foreign holdings of assets in the U.S. is $5 billion, and the increase in U.S. holdings of assets in foreign countries is -$3 billion. Therefore, the balance on the financial account is $5 billion - (-$3 billion) = $5 billion + $3 billion = $8 billion. However, the question seems to have a mistake in the options, as the correct calculation should be $8 billion, which is not listed.

Based on the Following Information from a Balance of Payments