Int 11
•
0 likes•38 views
The document discusses the balance of trade and trade deficits, explaining that a trade deficit occurs when a country imports more than it exports, while a trade surplus means it exports more. It outlines the two main accounts in the balance of payments - the current account, which tracks trade in goods/services and transfers, and the capital account, which tracks investment flows. The current and capital accounts must balance out to zero in the overall balance of payments. It notes that while a trade deficit may seem bad, it is not necessarily problematic and can be offset by investment inflows in the capital account.
Recommended
More Related Content
Similar to Int 11
Similar to Int 11 (20)
More from Gale Pooley
More from Gale Pooley (20)
Recently uploaded
Recently uploaded (20)
Int 11
- 2. Lecture 11 - Global Economy ECON 360 International Economics
- 3. The Balance of Trade and Trade Deficits Good or Bad
- 4. $300 $300
- 5. Chinese are buying dollars with TVs Chinese are investing in dollars
- 6. Trade Deficit Import more than Export Trade Surplus Export more than Import
- 7. Two Accounts Current Account Financial Capital Account
- 8. Current Account Merchandise Account Goods and Services Account Transfers
- 9. Merchandise Accounts Goods Stuff you can touch Limited scope
- 10. Goods and Services Account Merchandise plus services
- 11. Other Transactions in Current Account Interest and Dividend Payments Remittances and Foreign Aid
- 12. Current Account does not include investment flows Capital Account Tracks investment flows
- 13. Capital Account Investment Flows Foreign Direct Investment Foreign Portfolio Investment Debt Real Estate Cash
- 15. Balance of Payments Record of transactions between a country and the rest of the world over a period of time
- 16. Credits When foreigners make a payment to buy your stuff Debits When you make a payment to buy foreign stuff
- 17. Merchandise Exports Goods sold to foreigners Merchandise Imports Goods bought from foreigners
- 18. Balance of Payments Current Account + Capital Account = Zero
- 19. Current Account $300 Deficit Capital Account $300 Surplus Balance of Payments $0
- 20. Balance of Payments Account Component +Receipts Credits -Payments Debits Balance Current Merchandise Exports $400 $400 Merchandise Imports $600 -$200 Trade Balance Net Export Service $50 -$150 Net Exports Net Unilateral Transfers $30 -$180 Current Account Balance Capital Inflows $280 $280 Outflows $100 $180 Capital Account Balance Balance of Payments $730 $730 $0
- 21. Debt and Deficits No relationship Unless foreigners loan Americans back their dollars
- 22. Debt and Deficits If foreigners loan Americans back their dollars? Interest rates lower
- 23. Debt and Deficits Consumption debt Investment debt Borrow at 5% to invest at 10%
- 24. Foreign Ownership Dividends in dollars Greater demand Attracts more talent Control
- 25. Foreign Ownership Economic problems cause a selloff A selloff does not cause an economic problem