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
Share
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.
-$1 billion.