Balance of payments - calculation (2)

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	Credits (+), Debits (-)	$m (2011)
	Current account
1	Exports of goods	5850
2	Imports of goods	-5250
3	Balance of trade in goods	??

4	Exports of services	2100
5	Imports of services	-1900
6	Balance of trade in services	??

7	Income receipts (investment income)	??
8	Income payments (investment income)	-525
9	Net income receipts (investment income)	-50
10	Current transfers (net)	120
11	Net income flows	??

12	Current account balance	870

	Capital account
13	Capital account transactions (net)	-390

	Financial account
14	Direct investment, net	??
15	Portfolio investment, net	-160
16	Reserve assets funding	-55
17	Errors and omissions	-10
18	Capital and financial account balance	??

Question 1

Define the following terms:

(a) Direct investment
(b) Portfolio investment
(c) Errors and omissions

Question 2

Calculate the missing figures from the balance of payments account for Country Y given above and place them in the appropriate box.

Question 3

If country Y has a floating exchange rate system, draw a diagram to show the likely impact of the balance of payments situation shown above on the country's exchange rate.

Question 4

Evaluate two possible policies to correct the current account position country Y faces.

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International economics

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