16, Iceland a Nordic island country has a current account deficit of $1 billion and a

non-reserve financial account surplus of $750 million. The capital account is in a $100

million surplus. Additionally, Iceland's factories located in foreign countries earn $700

million. Iceland has a trade deficit of $800 million. Assume Iceland neither gives nor

receives unilateral transfers. Iceland's GDP is $9 billion.

i. What happened to Iceland's net foreign assets during 2015? Did it acquire or lose

foreign assets during the year?

ii. Estimate the official settlements balance. What happened to the foreign reserves of the

central bank of Iceland?

iii. Calculate NFIA.

iv. Show that BOP = 0

v. What is gross national expenditure (GNE), gross national income (GNI), and gross