If the United States imports goods and services for a total of $45 billion, exports goods and services for a total of $40 billion, records $4 billion as net interest and zero as net transfers, then the U.S. current account balance is?
If the United States imports goods and services for a total of $45 billion, exports goods and services for a total of $40 billion, records $4 billion as net interest and zero as net transfers, then the U.S. current account balance is
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-$1 billion.
To calculate the U.S. current account balance, we need to consider all the components of the current account: goods and services (trade balance), net primary income (which includes interest), and net secondary income (which includes transfers).
Given:
U.S. imports of goods and services: $45 billion
U.S. exports of goods and services: $40 billion
Net interest: $4 billion
Net transfers: $0
Step 1: Calculate the trade balance (net exports)
Trade balance = Exports – Imports
Trade balance = $40 billion – $45 billion = -$5 billion (deficit)
Step 2: Calculate the net primary income
Net primary income = Net interest = $4 billion
Step 3: Calculate the net secondary income
Net secondary income = Net transfers = $0
Step 4: Calculate the current account balance
Current account balance = Trade balance + Net primary income + Net secondary income
Current account balance = -$5 billion + $4 billion + $0 = -$1 billion (deficit)
Therefore, the U.S. current account balance is a deficit of $1 billion.