Miami University Balance of Payments Discussion

nstructions: The table below shows actual data of the U.S. current account. Please read Chapter 13 National and International Accounts: Income, Wealth, and the Balance of Payments (p. 475 – 480; 484 – 492; 495 – 497) and type up your answers to the following questions:.

1. Please give an example of a transaction that will be recorded in line 10.
2. “Primary income” in line 5 and line 13 refers to trade in factor services. Please give an example of a transaction that will be recorded in line 5.
3. “Secondary income” in line 8 and line 16 refers to unilateral transfers. Please give an example of a transaction that will be recorded in line 16.
4. How would you calculate trade balance? What is trade balance in 2017 and 2018, respectively?
5. How would you calculate net factor income from abroad (NFIA)? What is NFIA in 2017 and 2018, respectively?
6. Did the U.S. run a current account deficit or surplus in 2017 and in 2018? Why?
7. Will budget deficits necessarily cause current account deficits? Use the current account identity to explain.
8. Based on U.S. current account balances in 2017 and 2018, did the U.S. run a financial account deficit or surplus? Use the balance of payments identity to explain.
9. Is the U.S. considered a net borrower or a net lender in both years? What does this mean for U.S. net holdings of external assets?