Answer the Questions Below Based Upon the Following Balance of Payments

Question

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The Answer is (a) The balance on the current account is +167 million cugats.Since the sign is positive, we know more cugats flowed into this account than out of it.
(b)The balance on the capital account is -160 million cugats.Since the sign is negative, we know more cugats flowed out this account than into it.
(c) Purchase of cugats would show up in the financial and capital account.If Tundraland had purchased cugats, Tundraland would be trying to raise the value of its currency.By purchasing cugats, they increased the demand for cugats (to D₁ > D₀), which increased their price on exchange markets (to P₁ > P₀).This can be illustrated with the following diagram:

(a) The balance on the current account is +167 million cugats.Since the sign is positive, we know more cugats flowed into this account than out of it. (b)The balance on the capital account is -160 million cugats.Since the sign is negative, we know more cugats flowed out this account than into it. (c) Purchase of cugats would show up in the financial and capital account.If Tundraland had purchased cugats, Tundraland would be trying to raise the value of its currency.By purchasing cugats, they increased the demand for cugats (to D<sub>1</sub> > D<sub>0</sub>), which increased their price on exchange markets (to P<sub>1</sub> > P<sub>0</sub>).This can be illustrated with the following diagram:

Current account
Merchandise
Exports	+375
Imports	-210
Balance of trade
Services
Exports	+20
Imports	-10
Balance on services
Balance of goods and services
Net investment income	+7
Net transfers	-15
Investment Trans. Balance
Balance on current account
Financial and Capital Account
Capital inflows	+125
Capital outflows	-285
Balance on financial and capital account
Current and financial capital balance
Statistical discrepancy	-7
Totals	0

Answer the Questions Below Based Upon the Following Balance of Payments

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