EECS 1520 Lecture Notes - Lecture 14: Capital Account, Negative Number
21 Jun 2018
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EECS 1520 Lecture 14 Notes
Introduction
Actual Current Account Balance
The U.S. current account balance in the year 2011 is summarized in Exhibit 2.2.
Notice that the exports of merchandise were valued at $1,288 billion and imports of
merchandise at $1,934 billion.
Total U.S. exports and imports of merchandise and services and income receipts
amounted to $2,500 billion and $2,404 billion, respectively.
Line 9 shows that net transfers (which include grants and gifts provided to other
outries) ere −$1 illio
This negative number for net transfers represents a cash outflow from the United
States.
Oerall, the urret aout alae as −$1 illion, which is primarily attributed to
the difference between U.S. payments sent for imports and those received from
exports.
As shown in Exhibit 2.2, the current account balance (line 10) can be derived as the
difference between total U.S. exports and income receipts (line 4) and total U.S. imports
and income payments (line 8) with an adjustment for net transfer payments (line 9).
This is logical, since the total U.S. exports and income receipts represent U.S. cash
inflows while the total U.S. imports and income payments (and, in this case, the net
transfers) represent U.S. cash outflows.
The negative current account balance means that the United States spent more on
trade, income, and transfer payments in 2011 than it received during that year.
Capital Account
The capital account category originally included the financial account, which is now
treated separately (and described in the next section).
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Document Summary
The u. s. current account balance in the year 2011 is summarized in exhibit 2. 2. Notice that the exports of merchandise were valued at ,288 billion and imports of merchandise at ,934 billion. O(cid:448)erall, the (cid:272)urre(cid:374)t a(cid:272)(cid:272)ou(cid:374)t (cid:271)ala(cid:374)(cid:272)e (cid:449)as (cid:1011)1 (cid:271)illion, which is primarily attributed to the difference between u. s. payments sent for imports and those received from exports. This is logical, since the total u. s. exports and income receipts represent u. s. cash inflows while the total u. s. imports and income payments (and, in this case, the net transfers) represent u. s. cash outflows. The negative current account balance means that the united states spent more on trade, income, and transfer payments in 2011 than it received during that year. The capital account category originally included the financial account, which is now treated separately (and described in the next section). The capital account includes the value of financial assets transferred across country borders by people who move to a different country.
