Table 31-1

Question

Bolivian Trade Flows
Goods Services
Purchased Abroad $40 billion Purchased Abroad $20 billion
Sold Abroad $10 billion Sold Abroad $25 billion

What are Bolivia's net exports?
a.

$5 billion
b.

-$25 billion
c.

$30 billion
d.

-$5 billion

Answer 1

To calculate Bolivia's net exports, we need to find the difference between the value of goods and services sold abroad and the value of goods and services purchased abroad.

1. Calculate net exports for goods:

   • Goods sold abroad: $10 billion
   • Goods purchased abroad: $40 billion
   • Net exports for goods = Sold - Purchased = $10 billion - $40 billion = -$30 billion

2. Calculate net exports for services:

   • Services sold abroad: $25 billion
   • Services purchased abroad: $20 billion
   • Net exports for services = Sold - Purchased = $25 billion - $20 billion = $5 billion

3. Combine the net exports for goods and services:

   • Total net exports = Net exports for goods + Net exports for services = -$30 billion + $5 billion = -$25 billion

Therefore, Bolivia's net exports amount to -$25 billion.

The correct answer is: b. -$25 billion