Final answer:
To calculate the financial account balance, sum up the columns for Exports, Imports, and Balance, with the final number under Balance being the current account balance. The current account includes merchandise trade and additional financial flows like services and income payments. The process involves calculating the merchandise balance and then determining the current account by adding additional international financial flows.
Step-by-step explanation:
To calculate the financial account balance, you first need to list the values for all exports, imports, and other financial flows in their respective columns. The financial account includes transactions that involve financial assets and liabilities that take place between residents and non-residents. The process usually involves completing a table with the relevant figures for merchandise trade, which is the exchange of goods, and then adding the services and income payments to determine the current account balance.
The merchandise balance is calculated by subtracting imports from exports. If the country exports more than it imports, this results in a merchandise trade surplus, and if it imports more than exports, a trade deficit. To calculate the current account balance, add the net income from abroad and net current transfers to the merchandise balance. Importantly, the trade balance and income payments are part of the current account balance, which also includes other international financial flows.
These steps conclude with summing up the columns for Exports, Imports, and Balance. The final number under the Balance column is the current account balance. This balance reflects a country's financial dealings with the rest of the world over a specific period of time.