The next questions refer to the following.
Consider a country that, during a given year, has
$20 billion in net exports of goods,
-$3 billion in net exports of services,
$3 billion in repatriated income,
-$7 billion in net overseas transfers,
-$25 billion in net direct investment,
$41 billion in net portfolio investment,
-$10 billion in other net investment, and no additional capital account transactions.
-This country is running
A) a current account surplus of $13 billion
B) a current account deficit of $7 billion
C) a capital account surplus of $28 billion
D) a financial account deficit of $6 billion
E) a financial account surplus of $35 billion

Question

Quizplus · Accepted Answer

The current account is calculated as follows:

Current account = 
Net exports of goods ($20 billion) + 
Net exports of services (-$3 billion) + 
Repatriated income ($3 billion) + 
Net overseas transfers (-$7 billion) = 
$13 billion surplus

The capital account is zero because there are no capital account transactions.

The financial account is calculated as follows:

Financial account = 
Net direct investment (-$25 billion) + 
Net portfolio investment ($41 billion) + 
Other net investment (-$10 billion) = 
$6 billion surplus

Therefore, the correct answer is A) a current account surplus of $13 billion.

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