An economy has a trade surplus of 25 billion dollars and an overall current account deficit of 47 billion dollars,. What will be the balance of invisibles for this economy?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → A deficit of 72 billion dollars
Current Account Balance = Trade Balance + Balance of Invisibles
We are given:
- Trade Surplus: $25 billion
- Current Account Deficit: -$47 billion
Substitute the values:
- -$47 billion = $25 billion + Balance of Invisibles
- Balance of Invisibles = -$47 billion - $25 billion
- Balance of Invisibles = -$72 billion
Therefore, the balance of invisibles for this economy is a deficit of $72 billion.