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2. The nation of Freedonia had a current account deficit of $1 billion and a nonreserve financial account surplus of $500 million in 2019. a.
2. The nation of Freedonia had a current account deficit of $1 billion and a nonreserve financial account surplus of $500 million in 2019. a. What was the 'Official Settlements Balance of Freedonia in that year? What happened to the country's net foreign assets? b. Assume that foreign central banks neither buy nor sell Freedonian assets. How did the Freedonian central bank's foreign reserves change in 2019? How would this official intervention show up in the balance of payments accounts of Freedonia? c. How would your answer to (b) change if you learned that foreign central banks had purchased $600 million of Freedonian assets in 2019? How would these official purchases enter foreign balance of payments accounts? 2. The nation of Freedonia had a current account deficit of $1 billion and a nonreserve financial account surplus of $500 million in 2019. a. What was the 'Official Settlements Balance of Freedonia in that year? What happened to the country's net foreign assets? b. Assume that foreign central banks neither buy nor sell Freedonian assets. How did the Freedonian central bank's foreign reserves change in 2019? How would this official intervention show up in the balance of payments accounts of Freedonia? c. How would your answer to (b) change if you learned that foreign central banks had purchased $600 million of Freedonian assets in 2019? How would these official purchases enter foreign balance of payments accounts
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