- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 14. International Trade and Capital Flows
- Subject 4. The Balance of Payments
CFA Practice Question
If U.S. exports are $100, imports are $120, net income from foreign investments is $10, and net transfers from abroad is -$20, then the U.S. has a current account ______.
B. surplus of $240
C. deficit of $20
A. deficit of $30
B. surplus of $240
C. deficit of $20
Correct Answer: A
The current account surplus is equal to U.S. exports - U.S. imports + net income from foreign investment + net transfers from abroad.
User Contributed Comments 5
| User | Comment |
|---|---|
| achu | Our -20 net transfers could be the "US temp" workers sending money to their loved ones. |
| ehc0791 | The $10 net investment should belong to capital account, not current account. Am I right ? |
| bmeisner | ehc, I think it was meant to be net interest income (from investments) which is included in the current account. |
| Shaan23 | I agree with ehc. Last two dont belong in current account Oh wait. Good call bmeiser. Dividend and interest payments from ANY assets is included in current accounts. |
| To-be-CFA | @Shaan23 : Transfers from abroad are unilateral transfers and are included in Current A/c. |