HW1 - Econ 457, Fall 2010 Problem Set I (Due in class on...

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Econ 457, Fall 2010 Problem Set I (Due in class on February 8, 2011) Problems from the textbook: Chapter 12: 3, 5, 8, 9, 11 Chapter 13: 2, 4, 6, 7, 13, 16 Chapter 14: 4, 5 plus the following: 1. In 2007 a country X has a current account deficit of $1 billion and a nonreserve financial account surplus of $750 million. Its capital account is in a $100 million surplus. In addition, its factors located in foreign countries earn $700 million. X has a trade deficit of $800 million. Assume it neither gives nor receives unilateral transfers. Its GDP is $9 billion. a. What happened to X’s net foreign assets during 2007? Did it acquire or lose foreign assets during the year? b. Calculate the official settlements balance. Based on this number, what happened to the central bank’s (foreign) reserves? c. How much income did foreign factors of production earn in X during 2007? d. Calculate NFIA. e. Using the identity BOP = CA + FA+ KA, show that BOP = 0. 2.
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This note was uploaded on 08/01/2011 for the course ECON 457 taught by Professor Staff during the Spring '11 term at Iowa State.

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HW1 - Econ 457, Fall 2010 Problem Set I (Due in class on...

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