Midterm3 - a-s Economics l15B Winter 2011 Dr Janine L.F...

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a -s Name: Economics l15B Winter 2011 Dr. Janine L.F. Wilson Midterm #2 Balance of Payments Benefits and Dangers of Foreign Capital You will be given one hour and twenty minutes to complete this exam. Credit will be given to correct answers only if there are complete explanations. As the new Egyptian govemment takes over in September (assuming free and fair elections and a smooth transition with a new constitution) they will be faced with the job of showing the global community that they are capable of properly managing the finances of their country. Answer the questions below as if you were advising the new government of Egypt. 1. Establish for the new leaders of Egypt the current state of their economy relative to the rest of the countries of the world. Use the amounts below for the 200912010 financial year given in U.S. dollars. Debt Service Payments $690 million Foreign Direct Investment $0.76 billion Foreign Portfolio Investment $7.88 billion Goods Imported $45.60 billion Goods Exported $25.36 billion New Loans from Foreign Commercial Banks $5.00 billion Principal on loans paid to Foreign Commercial Banks $3.60 billion Remittances and Transfers $9.51 billion Resident Capital Outflow (Capital Flight) $1.26 billion a. What is the Current Account Balance of Egypt? (Show your work) (6 points) -.69 + 25.36 - 45.6 + 9.51 = oebt[erU(e Pralrnlnl' t fOrOorts -11.42 - r rn pu rt*l t P0.r t rFAA (p( an cl Tra r-c ( prt ' b. What is the Capital Account (Financial Account) Balance of Egypt? (Show your work) (6 points) 6'76 + 7'88 + 5 - 3'6 - 1'26= 14'78 rn6 ?rttrnt tore,g/! F0(p\$h brre,t Tnvp$lfrrp nr , TurptQn Pur lf crtr -O Tn'e'lt tt'Pav l Npl' Ld( eolh fnPrCrq I San t 'f - QrirncQqr on lqsnJ puc,{ ta FrrPrih 1-,rr1rprr,ar Bqrtr - geu,if n t 1ag iat, our[liu- c. Is the Balance ofpayments balanced? How? (4 points) ccqPrl'(t fr'9hI Yes, $3.36 billion came into the "cash account , .\ - ( jJb \'1 '1Qr - li\'\ t' '
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Emmics ll5B Winler 2011 Dr. Jmire L-F- Wilson There was a recent increase in foreign portfolio inveshent ftrsm a net outflow of $9.21 billion in 2008/09 to a net inflow of $7.88 billion in 2009110. At the same time net foreign direct investuent fell frrom S8.l I billion in 2008/09 to $6.76 billion in2009110. Evaluate
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Midterm3 - a-s Economics l15B Winter 2011 Dr Janine L.F...

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