Current Account Approximated by Trade Balance in Goods and Services

Steps:

• Identify the balance on goods and services: exports minus imports.
• Calculate exports ($12 million) minus imports ($20 million) = -$8 million.
• Note that "net income" is unspecified as foreign income, so exclude it from current account.
• Conclude current account balance equals the goods and services balance.

Why B is correct:

• Current account primarily includes net exports of goods and services; without specified net foreign income, it equals trade balance of -$8 million per IMF balance of payments manual.

Why the others are wrong:

• A: Equals imports only, ignoring exports.
• C: Incorrectly adds exports and imports then subtracts net income.
• D: Nonsensical arithmetic, possibly misreading units.

Final answer: B. -$8 million