Trade Balances Economics

Table 12.4 U.S. International Transactions, 2006 ($ billions)

Current Account transactions

Exports of Merchandise  $1,023.1

Imports of Merchandise  −1,861.4

Balance of Trade (Goods)  −838.3

Exports of Services   422.6

Imports of Services  −342.8

Balance on Services  79.7

Balance on Goods & Service  −758.5

Income Receipts on U.S. Assets Abroad  650.5

Income Payments of Foreign Assets in the U.S.  −613.8

Balance on Investment Income  −36.6

Balance on Goods, Services, and Income  −721.9

Unilateral Transfers, Net  −89.6

Balance on Current Account  −811.5

Capital Account transactions, net   −3.9

Financial Account Transactions  −1,055.2

Change in U.S. Owned Assets Abroad

U.S. Official Reserve Assets  2.4

U.S. Government Assets, Other than Official Reserve  5.3

U.S. Private Assets  −1,062.9

Change in Foreign Owned Assets in the U.S.  1,859.6

Foreign Official Assets  440.3

Foreign Private Assets  1,419.3

Balance on Financial Account  804.4

Statistical Discrepancy  −17.8

Table 12.4 provides U.S. International Transactions for 2006.  The accounts are in balance in total even though there is a substantial deficit in the current account.  What does a deficit in the current account represent?  What accounts offset the deficit in the current account to bring the accounts into balance in total?  What do these accounts represent?  How does your explanation help you to interpret Figure 12.4?

Your 200 word answer should focus on selecting and organizing your most relevant comments in a coherent fashion.

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