Alphas balance of payments

Question

Alpha’s balance of payments for the year of 2005 as illustrated below. All of the figures are in billions of dollars. Describe

(a) the balance of trade,

(b) for the year of 2005, Alpha’s balance of payments as illustrated below. Figures are in billions of dollars describe the balance on goods and services through the figure.

(c) for 2005, Alpha’s balance of payments is given below. (billions of dollars) Estimate the balance on current account

(d) Alpha’s balance of payments is depicted below of 2005. Calculate the balance on capital account?

Does Alpha contain a balance of payments deficit or surplus? Depict.

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Merchandise exports       +$40               Net Transfers                                    +$10
Merchandise imports         -30                Foreign investment in Canada              + 10
Service exports               +15                Canadian investment abroad               - 40
Service imports                -10                Official international reserves               + 10
Net investment income     - 5

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Answer 1

Balance of trade = $10 billion surplus (= exports of goods of $40 billion minus imports of goods of $30 billion). Balance on goods and services = $15 billion surplus (= $55 billion of exports of goods and services minus $40 billion of imports of goods & services). Balance on present account = $20 billion surplus (= credits of $65 billion minus debits of $45 billion). Balance on capital account = $30 billion deficit (= Foreign investment in Canada of $10 billion minus Canadian investment abroad of $40 billion). Balance of payments = $10 billion deficit.