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Select the correct value for each of the boxes. Simplified Balance of Payments [Billions of Dollars) Account Net Balance Merchandise L Services 4 Income 4

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Select the correct value for each of the boxes. Simplified Balance of Payments [Billions of Dollars) Account Net Balance Merchandise L Services 4 Income 4 Unilateral Transfers 2 Current Account +4 Financial Account _7 Statistical Discrepancy -1 Trade Balance 0 an American business owner purchases chocolates from Belgium in order to sell them in her shops. This would be entered as a v item under the V section of the U.S. current account. The net value of the merchandise and services accounts combined gives the value of V within the national income accounting equation GDP = C + 1+ (3 + )1. If you rewrite the equation as 2-: = GDP [C + I + (3), you can see that the current V U.S. value of): implies that v .This means that the United States is producing 7 than it is consuming, making it a V . Any surplus or decit in one account must be offset by decits or surpluses in other balanceofpayments accounts. Because the current account is in v , the excess of foreign currency held by Americans must either be loaned to foreigners, or used to buy foreign stocks or bonds. All of these transactions are then recorded in the v account. Since any imbalance in one account automatically leads to an equal, but opposite, imbalance in the other, the balance of payments is always v

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