Consider the econ of Opulenza. In Opulenza domestic investment was 400 milion and there was 20 million in capital gains or domestic wealth during 2007. Opulenzas purchased 120 million in new foreign assets during the year; Foreigners purchases 160 million in Opulenzan assets. Assume the valuation effect total 1 million in capital gains or external wealth.
a) compute the change in domestic wealth in Opulenza
b) compute the change in external wealth for Opulenza
c) compute the change in total wealth
d) compute domestic savings current account
e) compute Opulenzas current account. Is the CA a deficit or a surplus?
f) Explain the intuation for the C4 deficit/ surplus in terms of savings in opulenza, financial flows and its domestic/external wealth position.