a) Suppose the Current Account has a deficit of 300 and we invest 200 overseas. What inflow of foreign investment is needed to provide Balance of payment equilibrium?

b) Suppose we import 500 and the capital account has a deficit of 400. What level of exports would generate Balance of Payment equilibrium?

c) Suppose we are in Balance of Payment equilibrium with a trade deficit of 300. What happens to the trade deficit if the public sector sells 100 in securities to the foreign sector to finance the budget deficit?

d) True or False and explain: Currently the foreign sector holds 28.5% of our $24 trillion national debt. If we reduced the foreign sectors holding our trade balance would improve.

e) True of False and explain: Investment is critical to economic development. Developing countries have immature domestic financial sectors, therefore they should pursue trade policies designed to produced trade surpluses.