Russia imports 5 billion Rubles of goods and exports 7 billi

Russia imports 5 billion Rubles of goods and exports 7 billion rubles of goods. At the same time, Russia imports 4 billion rubles of services, and Russia makes a 1 billion Ruble net unilateral transfer to Albania. Russia\'s current account equals.

Select one:

a. - 3 billion Rubles.

b. -6 billion Rubles.

c. 6 billion Rubles.

d. 4 billion Rubles.

e. zero

Solution

Answer : - 3 billion Rubles

Reason = current account = exports - imports + net income abroad + net current transfers

Therefore, current account = 7 - (5 + 4) + 0 + (-1) = -3

Unilateral transfers include gifts, donations, personal remittances and other ‘one-way’ transactions. These refer to those receipts and payments, which take place without any service in return. Receipt of unilateral transfers from rest of the world is shown on the credit side and unilateral transfers to rest of the world on the debit side. Thus the net transfer to Albania is shown as negative.

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