On December 31, a country has the following stocks of international assets and liabilities to foreigners

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QUESTION:

On December 31, a country has the following stocks of international assets and liabilities to foreigners.

• The country’s residents own $30 billion of bonds issued by foreign governments.

• The country’s central bank holds $20 billion of gold and $15 billion of foreign-currency assets as official reserve assets.

• Foreign firms have invested in production facilities in the country, with the value of their investments currently $40 billion.

• Residents of foreign countries own $25 billion of bonds issued by the country’s companies.

a. What is the value of the country’s international investment position? Is the country an international creditor or debtor?

b. If the country during the next year runs a surplus in its current account, what will the impact be on the value of the country’s international investment position?


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