Question

If the United States exports $150 billion of goods and services and imports $100 billion of goods and services and there is no other factor income or transfers, the balance on the current account is: $250 billion. –$250 billion. $50 billion. –$50 billion. zero.

Answer 1

Answer:

$50 billion.

Explanation:

Current Account represents the balance of Trade (Imports & Exports) plus net income and direct payments. Countries strive to maintain their current account surplus which is an indicator that the country is producing and exporting more than its consumption and imports. In this case, it is clearly stated that there are no other factors like income or transfers, so we just have to compare exports and imports. The formula for Current Account in this case is:

                                                Exports - Imports

⇒ 150 - 100 = $50 billion.