The extract from a country's balance of payments account is shown below Item Imports ($ million) Export ($) Agricultural products - 200 Mineral products - 3...

Answer Details

(a) Balance of trade: The balance of trade refers to the difference between a country's exports and imports of goods (visible trade). In this case, the total exports of goods are 200 + 300 = 500 million dollars, while the total imports of goods are 250 + 400 = 650 million dollars. Hence, the balance of trade is a deficit of 650 - 500 = -150 million dollars.

(b) Invisible trade balance: The invisible trade balance refers to the difference between a country's exports and imports of services (invisible trade). In this case, the total exports of services are 25 + 30 = 55 million dollars, while the total imports of services are 50 + 75 + 85 = 210 million dollars. Hence, the invisible trade balance is a deficit of 210 - 55 = -155 million dollars.

(c) Balance on current account: The balance on current account refers to the overall balance of a country's visible and invisible trade, as well as transfers. In this case, the total exports are 500 + 55 = 555 million dollars, while the total imports are 650 + 210 + 150 = 1010 million dollars. Hence, the balance on current account is a deficit of 1010 - 555 = -455 million dollars.