Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

27. Ruritania is calculating its balance of payments for the year. All transactions for the year are listed below (all amounts are expressed in US

image text in transcribed
27. Ruritania is calculating its balance of payments for the year. All transactions for the year are listed below (all amounts are expressed in US dollars). a. Ruritania received weapons worth $200 from the US under its military program; no payment is necessary. b. A Ruritanian firm exported $400 of cloth. c. A Ruritanian resident is paid $10 in interest on a loan to a foreigner. d. Foreign tourists visited Ruritania and spent S100 in traveler's checks. e. Ruritanian investors invested $200 overseas and received S50 in interest on the investment that same year. f. A Japanese construction firm received a S150 installment payment for work done in Ruritania. A) Calculate Ruritania's current account (CA) and Financial Account (FA) balances. Briefly interpret the CA balance. B) What change in the official reserve (OR) account is implied such that the balance of payments balances? Interpret this change

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started