Chapter 10: Q 33. (page 267)
A government official announces a new policy.
The country wishes to eliminate its trade deficit, but will strongly encourage financial investment from foreign firms. Explain why such a statement is contradictory.
Yes, these statements are contradictory.
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The GDP for the United States is billion and its current account balance is billion. What percent of GDP is the current account balance?
Does a trade surplus mean an overall inflow of financial capital to an economy, or an overall outflow of financial capital? What about a trade deficit?
State whether each of the following events involves a financial flow to the U.S. economy or away from the U.S. economy:
a. Export sales to Germany
b. Returns paid on past U.S. financial investments in Brazil
c. Foreign aid from the U.S. government to Egypt
d. Imported oil from the Russian Federation
e. Japanese investors buying U.S. real estate
If you observed a country with a rapidly growing
trade surplus over a period of a year or so, would you be more likely to believe that the country's economy was in a period of recession or of rapid growth? Explain.
Both the United States and global economies are booming. Will U.S. imports and/or exports increase?
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