An economy has two firms. Firm A produces wheat and firm B produces bread. In a given year, produces 50 bushels of wheat, sells 20 bushels to firm B at $3, exports 25 bushels at the same price to France, and stores 5 bushels as inventory. Firm A pays $50 in wages to consumers. Firm B produces 50 loaves of bread and sells them to consumer for $2 per loaf. Firm B pays $20 in wages. In addition, consumers import and consume 15 loaves from France paying $1 per loaf.

（d）,Assume that the owners of Firm B are French and repatriate all of Firm B’s profits. What is the current account balance? What is the financial account balance?

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To calculate the current account balance and the financial account balance we need to first determin... View the full answer