Final answer:
The U.K. merchandise trade deficit for 2001 was £44 billion, and the current account balance was £53 billion. Payments on foreign investment and government transfers are classified based on whether they are incoming or outgoing.
Step-by-step explanation:
The U.K. merchandise trade deficit for 2001 can be calculated by subtracting the value of imports from the value of exports. In this case, the value of imports is £225 billion (£192 billion for goods and £33 billion for services), and the value of exports is £269 billion (£192 billion for goods and £77 billion for services). Therefore, the trade deficit is £225 billion minus £269 billion, or -£44 billion. Since this value is negative, it indicates a trade deficit. The current account balance for 2001 can be calculated by adding the value of exports of goods and services (£269 billion) and receipts of income from abroad (£140 billion) and subtracting the value of imports of goods and services (£225 billion) and payments of income going abroad (£131 billion).
Therefore, the current account balance is £269 billion + £140 billion + £225 billion + £131 billion = £53 billion. Since this value is positive, it indicates a surplus. The decision on whether payments on foreign investment and government transfers count on the positive or negative side of the current account balance is based on whether these payments are incoming or outgoing. Payments on foreign investment that come into the country are regarded as positive inflows, while payments on foreign investment that go out of the country are considered negative outflows. Similarly, government transfers that come into the country are considered positive inflows, while government transfers that go out of the country are regarded as negative outflows.