Question
Q. (20%) The country X had a current account deficit of $1 billion and a non-reserve financial account surplus of $500 million in 2019. a.
Q. (20%) The country X had a current account deficit of $1 billion and a non-reserve financial account surplus of $500 million in 2019.
a. What was the balance of payments of X in that year? What happened to the country's net foreign assets?
-$500,000,000
b. Assume that foreign central banks neither buy nor sell X's assets. How did X's central bank's foreign reserves change in 2019? How would this official intervention appears in the country's balance of payment accounts?
c. How would your answer to question (b) change if, in fact, other central banks had purchased $600 million of X's assets in 2019? How would these official purchases enter the foreign balance of payments accounts?
d. Produce X's balance of payment accounts for 2019 assuming that the event described in question (c) had taken place.
Part d is what I'm struggling with so any help would be greatly appreciated :)
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