Nco and exchange rates

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Nco and exchange rates

  1. 1. 1. Why isn’t it bad that the US has a deficit in its current account? 2. If the Chile exports $625 billion, and imports $610 billion, what does their current account look like? 3. If the Chile exports $625 billion, and imports $610 billion, what does their capital account look like? 4. Why does more trade lead to more opportunities within countries? 5. How would an increase in tariffs or quotas affect the US economy?
  2. 2.  Goods/services  Capital investments/loans  Net Capital outflows (NCO)  = purchases of foreign assets by domestic residents - purchases of domestic assets by foreigners  (Similar to capital account)  NCO = NX  Any transaction has an effect on both sides of equation
  3. 3.  Trade?
  4. 4.  Think/pair/share  Tastes, local and foreign  Prices of goods (inflation/deflation)  Exchange rates  Incomes, local and foreign  Transportation costs  Government policies
  5. 5.  Free Trade Zones  NAFTA  Eurozone Mercado Común del Sur
  6. 6.  Exports $100billion to Brazil  Net Exports  Current Account  Capital Account  NCO?  Imports $100 billion from Chile  Net Exports  Current Account  Capital Account  NCO? NCO = purchases of F. Assets by locals – purchases of domestic assets by foreigners
  7. 7.  Exports $100B to India & Japan  Imports $50 B from India & Japan  Net Exports  Current Account  Capital Account  NCO?  Imports $75B to China & Japan  Exports $25B to China and Japan  Net Exports  Current Account  Capital Account  NCO? NCO = purchases of F. Assets by locals – purchases of domestic assets by foreigners  Exports $75B to India & China  Imports $75B from India & China  Net Exports  Current Account  Capital Account  NCO?
  8. 8.  Balance of payments  Net importer/Exporter (explanation of why) (oil situation)  NCO  Trading blocs  5 export goods  3 imported goods  Exchange rate between US, Euro, Yen  Graph: 10 year history of exchange rate between US Dollar  Cite your source Choose 1: Poster Pamphlet Essay Website
  9. 9.  Balance of payments  Net importer/Exporter (explanation of why) (oil)  NCO  Trading blocs  5 export goods  3 imported goods  Exchange rate between US, Euro, Yen  Graph: 10 year history of exchange rate between US Dollar  Cite your source Choose 1: Poster Pamphlet Essay Website
  10. 10.  Balance of payments  Net importer/Exporter (explanation of why) (oil)  NCO  Trading blocs  5 export goods  3 imported goods  Exchange rate between US, Euro, Yen  Graph: 10 year history of exchange rate between US Dollar  Cite your source Choose 1: Poster Pamphlet Essay Website
  11. 11.  Balance of payments  Net importer/Exporter (explanation of why) (oil)  NCO  Trading blocs  5 export goods  3 imported goods  Exchange rate between US, Euro, Yen  Graph: 10 year history of exchange rate between US Dollar  Cite your source Choose 1: Poster Pamphlet Essay Website

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