Question

BALANCE OF PAYMENT Suppose the following data represent Zambia's international transactions measured in Kwacha Merchandise exports...

BALANCE OF PAYMENT

Suppose the following data represent Zambia's international transactions measured in Kwacha

Merchandise exports 18 Merchandise imports 13
Change in foreign assets in Zambia 15 Change in assets abroad 11
Exports of services 10 Imports of services 8
Income receipts on investment 8 Income payments on investment 13
Unilateral transfers 6

What is its balance on capital account? *

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What is its balance on current account? *

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What is Zambia’s balance of trade? *

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What is Zambia’s balance of Service? *

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What is Zambia’s net exports? *

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What is Zambia’s international reserve assets? *

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Homework Answers

Answer #1

1. Balance of capital account = Unilateral transfer + Factor payment to abroad - Factor income = 6+13-8 = 11 ( deficit )

2. Balance of Current account = Export - Import + Factor income from abroad - Factor payment to abroad - Unilateral transfer

= 18-13 + 8 - 13 -6 = -6 ( Deficit )

3. Balance of trade = Export - Import

= 18 - 13= 5 (Trade surplus )

4. Balance of service = Export of service - Import of service = 10 - 8 = 2

5. Net Export = Export - Import

= 18 - 13 = 5 (surplus)

6. International reserve assets = Change in asset in Zambia - Change in asset abroad = 15 - 11 = 4 (positive)

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