Answer the Questions Below Based Upon the Following Balance of Payments

question 28

Essay

Answer the questions below based upon the following Balance of Payments table for Tundraland (figures are in millions of cugats):
$\begin{array}{|l|r|}\hline \text { Current account } & \\\hline \text { Merchandise } & \\\hline \text { Exports } & +375 \\\hline \text { Imports } & -210 \\\hline \text { Balance of trade } & +165 \\\hline \text { Services } & \\\hline \text { Exports } & +20 \\\hline \text { Imports } & -10 \\\hline \text { Balance on services } & +10 \\\hline \text { Balance of goods and services } & +175 \\\hline \text { Net investment income } & +7 \\\hline \text { Net transfers } & -15 \\\hline \text { Investment Trans. Balance } & -8 \\\hline \text { Balance on current account } & +167 \\\hline \text { Capital Account } & \\\hline \text { Capital inflows } & +125 \\\hline \text { Capital outflows } & -250 \\\hline \text { Balance on capital account } & -125 \\\hline \text { Current and capital balance } & +42 \\\hline \text { Statistical discrepancy } & -2 \\\hline \text { Official transactions account } & +40 \\\hline \text { Totals } & 0\\\hline\end{array}$ (a)What is the balance on the current account? Did more cugats flow in or out of that account?
(b)What is the balance on the capital account? Did more cugats flow in or out of that account?
(c)Did Tundraland buy or sell its currency? How do you know? Is Tundraland trying to lower or raise the value of its currency? Show graphically.

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Definitions:

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or output.

Output Level

The quantity of goods or services produced within a given period by a business or economy.

Total Variable Cost

The sum of all costs that vary with the level of output, including expenses like materials and labor, but not fixed costs.

Output Level

Refers to the quantity of a product or service produced by a company or an economic sector within a specific period.