Calculations in Balance of Payments (1 Viewer)

[snow.flakes]

Hi,
there's this question where:
Net Goods = $-15b
Net Services = $-6b
Net Income - $-25b
Current Transfers = $-2b

What is the balance on goods and services?
i picked $-21b
but the answer is $21b
Why? Please help

Also, when it asks for the most likely reason for Australia's persistent CAD, do we pick the segment where there is a larger deficit, eg. Net Income, ?

Thanks!

 

[munchiecrunchie]

the balance on goods and services is the sum of net goods and net services, ie it is equal to ( - $15b) + ( - $6b) = - $21b

as for the most likely reason of the CAD, yes it is the net income component, because it makes up the majority of the CAD, and doesn't have a tendency to change like the balance on G + S (which moves through cyclical cycles).

 

[snow.flakes]

the balance on goods and services is the sum of net goods and net services, ie it is equal to ( - $15b) + ( - $6b) = - $21b

as for the most likely reason of the CAD, yes it is the net income component, because it makes up the majority of the CAD, and doesn't have a tendency to change like the balance on G + S (which moves through cyclical cycles).

Thanks!
But the answer for the first question was $21b not $-21b
i picked $-21b but i guess the answer could be wrong?

 

[zammitm1]

the net incomes deficit that we experience every year is a structural problem in our accounts where overseas investment into our banks or sharemarket or industries leads to dividends, incomes or interest payments being debits in the net incomes section of the current account. The net incomes deficit is also caused by Australia's relatively high levels of overseas debt, where we may be paying interest on loans overseas.

also there is no way that the balance of net goods and services is $21b, it has to be -$21b

hope that helps.