Answer: The answer is A. -$7billion
Explanation:
From the question above, we have the following parameters:
Exports of goods and services=$12 billion
Imports of goods and services=$14 billion
Net income on investments= -$4 billion
Net transfers= -$1 billion
Increase in foreign holdings of assets in the United States= $6 billion
Increase in U.S. holdings of assets in foreign countries= $3 billion
The formula for calculating Current Account Balance is given as:
CAB = (X - M) + NY + NCT
Where
CAB = current account balance
X = export
M = import
NY = net income from abroad
NCT = net current transfers
Therefore, we have:
CAB = (12 - 14) - 1 - 4 = - $7 billion.
Therefore, our answer is A.
