Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In 2010 the country of Ikonomia has a current account deficit of $1 billion and a nonreserve financial account surplus of $750 million. Ikonomia's capital

In 2010 the country of Ikonomia has a current account deficit of $1 billion and a nonreserve financial account surplus of $750 million. Ikonomia's capital account is in a $100 million surplus. In addition, Ikonomian factors located in foreign countries earn $700 million. Ikonomia has a trade deficit of $800 million. Assume Ikonomia neither gives nor receives unilateral transfers. Ikonomia's GDP is $9 billion.

a.What happened to Ikonomia's net foreign assets during 2010? Did it acquire or lose foreign assets during the year?

b.Compute the official settlements balance (OSB). Based on this number, what happened to the central bank's (foreign) reserves?

c.How much income did foreign factors of production earn in Ikonomia

during 2010?

d.Compute net factor income from abroad (NFIA).

e.Using the identityBOP = CA + FA + KA,show thatBOP= 0.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Recommended Textbook for

Analysis for Financial Management

Authors: Robert Higgins

11th edition

77861787, 978-0077861780

More Books

Students also viewed these Finance questions

Question

Am I ambitious?

Answered: 1 week ago