Question

In 2010, a country imported goods worth $500 billion and exported goods worth $443 billion. It exported services worth $248 billion and imported services worth $330 billion. Payments on investments abroad totaled $199 billion, while returns paid on foreign investments were $125 billion. Unilateral transfers from the country to other nations amounted to $94 billion. What was the country’s current account deficit for 2010?

A. $70 billion
B. $159 billion
C. $142 billion
D. $65 billion

Answer 1

B. $159 billion

Explanation:

A country's current account deficit is a measurement of a country’s financial transactions. Current account deficit implies that a country spends more on the importation of goods than it exports.

Current account deficit = sum of all money spent on importation and payments made - sum of all money gained from exportation and investments.

Therefore:

Current account deficit = ($500 billion + $330 billion + $125 billion + $94 billion) - ($443 billion + $248 billion + $199 billion) = $1049 billion - $890 billion = $159 billion