If the current account balance is 235 billion and U.S. official ...

[laurencescou]

If the current account balance is 235 billion and U.S. official reserves increased by 35 billion, what is the official settlements account balance and the capital account balance?
 
  What will be an ideal response?

Question 2

The table below shows data for Indonesia between 2005 and 2006.
 
  2005 2006
  Money growth rate 21.4 12.0
  Real GDP growth rate 5.7 5.5
 
  Assume the rate of velocity change is constant. According to the quantity theory of money, Indonesia's inflation rate
  A) is higher in 2005 than in 2006.
  B) was 17.5 percent in 2006.
  C) is 27.1 percent in 2005.
  D) will increase over the 12 months.

[vkodali]

Answer to Question 1

The official settlements account equals the negative of the change in official reserves, so the official settlements account balance is -35 billion. Then, the sum of the current account balance plus the capital account balance plus the official settlements account balance equals zero, which means that the capital account balance must equal 200 billion.

Answer to Question 2

A