5. Balance of payments The following tables show a hypothetical balance of payments statement for the United States. (Note: All values are in billions of dollars.) Complete the tables by filling in the missing cells. (Hint: Use the negative sign for all debits, and assume that the total balance of payments equals zero. Balance of Payments CURRENT ACCOUNT Debits Credits Balance U.S. Merchandise Exports 300 S. Merchandise -240 UImports Balance of Merchandise Trade 60 U.S. Service Exports U.S. Service Imports -204 Balance on Service Trade 48 Balance on Goods and Services Income Receipts of Americans from Abroad 390 Income Receipts of Foreigners in the U.S. Net Income Receipt 21 Net Unilateral Transfers Balance on Current Account -369 CAPITAL ACCOUNT Debits Credits Balance Foreign Investment in the U.S 540 U.S. Investment Abroad -330 Balance on Capital Account OFFICIAL RESERVE TRANSACTIONS Debits Credits Balance U.S. Official Reserve Assets Foreign Official Assets in the U.S. 300 Balance, Official Reserve Account According to the data presented in the preceding tables, there is a merchandise trade of $ billion . surplus deficit Grade It Now Save & Continue3. Interest rate differentials The following graph depicts the market for U.S. dollars in terms of South African rand. Suppose the interest rate in the United States decreases, while in the rest of the world, interest rates remain the same. This makes U.S. assets desirable to South African investors. less/ more On the following graph, shift one or both of the curves to show the effect of the change in the desirability of U.S. assets on the exchange rate. (? O Supply Demand Supply EXCHANGE RATE (Rand per dollar) Demand QUANTITY OF DOLLARS appreciation/depreciation A fall in the interest rate in the United States causes of the dollar. more/less more/ less South African goods imported into the United States become _ attractive to U.S. consumers because they are expensive. Conversely, U.S. exports become attractive to South African consumers. Therefore, U.S. net exports more/ less decrease/increase