1. Net transfers from abroad are a(n) _______ entry on the current account.
2. The current, financial, and capital accounts must sum to_______.
3. According to latest data on the U.S. international investment position, the United States is a net________.
4. The United States has a large ______ on the current account but a large ________ on the financial account.
5. Calculating the Capital and Current Account. During the year, a country (including its government), acquires an additional $100 billion of foreign assets. At the same time, foreign residents acquire $200 billion of this country’s assets. Ignoring minor items, what is the balance on the capital account for this country? What about its current account?
6. Understanding Sovereign Investment Funds. China, Kuwait, and other countries that have had large current account surpluses are now investing some of their funds abroad in the private sector through sovereign investment funds. These funds have raised concerns. After reading a report from the Congressional Research Service, Sovereign Wealth Funds: Background and Policy Issues for Congress, outline what you think are the key issues. This report is available at fpc.state.gov/documents/organization/110750.pdf (accessed August 17, 2010).
7. A Debt Puzzle for the United States. As we discussed in the chapter, the United States is a net international debtor that is, U.S. ownership of foreign assets is less than foreign ownership of U.S. assets. Yet, in 2006, net income from abroad was positive. Why is this a puzzle? Can you think of any possible explanations for this puzzle?