Balance of Payments Exercise The country of Statsylvania has the following accounts related to other countries: USS - Billions TO Imports (goods) Exports services) Income receipts on Statsylvania investments abroad Net capital account Direct investment abroad Portfolio investment liabilities Other investments (net) Income payments on foreign investments in Statsylvania Direct investment in Statsylvania Portfolio investment assets Reserves Exports (goods) Current transfers Imports (services) Helpful Hints: All amounts are used once in the calculations "Net" means the subtraction of an inflow (positive) and an outflow (negative) Inflows are already positive and outflows are negative so do not changes signs to calculate a net - simply add! An amount already marked as "net" means it is already the difference of inflows and outflows (i.e., no subtraction needed). Current Account 1. What is Statsylvania's goods balance of trade? 2. What is their service balance of trade? 3. What is their net income balance? 4. What is their current account balance (remember to consider all components)? Capital Account 5. What is the net direct investment in Statsylvania? 6. What is Statsylvania's net portfolio investment position? 7. What is the country's capital account position (remember to consider all components)? Conclusions 8. Should the current account and capital account balance? 9. If the current account and capital account do not balance, how does international accounting fix the problem? (Hint - did you review the Power Points for Chapter 7?)