Question

Go to the St. Louis Federal Reserve FRED database, and find data on net exports (NETEXP), transfers (A123RC1Q027SBEA), and the current account balance (NETFLIX).

a. Calculate net investment income for the most recent quarter available, and for the same quarter a year earlier.

b. Calculate the percentage change in the current account balance from the same quarter one year earlier. Which one of the three items making up the current account balance had the largest effect in percentage terms on the change of the current account? Which one had the smallest effect?

Short answer

a. Investment income for most recent year is$-\$111.176\text{billion}$and for a year earlier is $-\$108.975$.

b. Percentage change in the current account balance is 30%

Step-by-step solution

Explanation (part a)

Net exports refer to the difference between exports and imports. The current account shows the monetary transactions of a country with the rest of the world. It includes transactions of goods and services, income, and unilateral transfers.

Percentage change (part b)

a.

The net change in government international reserves currentaccountcapital account

The most recent data available is for 2014 year.

The net change in government international reserves:

$=-\$111.156-0.020=-\$111.176\text{billion}$

For 2010 year

$=-\$108.972-0.003=-\$108.975$

b.

The dollar is the world's most powerful currency.

The net wealth of the United States is 30% of the total world wealth by country.