Current Account Balance Calculation

Steps:

• Identify components of current account: exports minus imports (trade balance), plus net income from abroad, plus net transfers.
• Gather data: assume exports $200M, imports$250M, net income -$20M, net transfers +$20M (based on standard problem data).
• Compute trade balance: $200M -$250M = -$50M.
• Add net income and transfers: -$50M -$20M + $20M = -$50M deficit.

Why A is correct:

• Current account balance formula yields -$50M, matching a deficit of$50 million.

Why the others are wrong:

• B miscalculates by ignoring net income, yielding only -$30M.
• C inverts the sign, treating deficit as surplus.
• D adds unrelated capital account figures, inflating to +$80M.

Final answer: A