Question

If, in a country's balance of payments statement, the merchandise trade balance is $-100, services exports and factor income receipts from abroad in total exceed services imports and factor income payments abroad by $25, unilateral transfers made exceed unilateral transfers received by $15, and the financial account has debits exceeding credits by $30, then the country's balance on current account is

		$-120.
		$-90.
		$-60.
		$-75.

Answer 1

Answer - The merchandise trade balance is -$100 in a country's balance of payment. Here outflow of money is greater in merchandise trade. Services exports and factor income receipts from abroad in total exceed services imports and factor income payments abroad by $25. It means inflow of money is greater.

Unilateral transfers made exceed unilateral transfer received by $15. Here outflow of money is greater.

The current account balance includes, merchandise trade balance, trade of services, factor income from abroad and unilateral transfers. We add all these variables,

Current account balance = (-$100 + $25 - $15)

Current account balance = -$90

Option B is the correct answer.