How is service balance calculated?
The Balance of Current AccountBalance of current account = Exports of goods + Imports of goods + Exports of services + Imports of services.= $3,50,000 + (-$4,00,000) + $1,75,000 + (-$1,95,000)= -$70,000 i.e.
current account is in deficit..
What is current account balance of a country?
The current account balance of payments is a record of a country’s international transactions with the rest of the world. The current account includes all the transactions (other than those in financial items) that involve economic values and occur between resident and non-resident entities.
How do you solve a current account deficit?
Policies to reduce a current account deficit involve:Devaluation of exchange rate (make exports cheaper – imports more expensive)Reduce domestic consumption and spending on imports (e.g. tight fiscal policy/higher taxes)Supply side policies to improve the competitiveness of domestic industry and exports.
What is the current account deficit?
The current account deficit is a measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the products it exports. … The current account represents a country’s foreign transactions and, like the capital account, is a component of a country’s balance of payments (BOP).
How is capital account calculated?
Calculating the Capital Account Non-produced and non-financial assets include things like drilling rights, patents, and trademarks. … Thus, the balance of the capital account is calculated as the sum of the surpluses or deficits of net non-produced, non-financial assets, and net capital transfers.
What is balance of payments formula?
The Balance of Payments formula can be expressed as follows. Balance of Payments = Balance of current account + Balance of capital account + Balance of financial account + Balancing Item. BoP surplus means that exports are more than imports. In contrast, a BoP deficit is indicative of imports being more than exports.