macroeconomics quizzes - Introduction to Macroeconomics
abdll7
vi_a.docVI.A. International Finance I
1. Trade Imbalances across the World
Supplementary Figure
2. Balance of Payment Accounts
Current Account—net inflow of income from abroad (from (i) the excess of exports over imports, (ii) excess of interest on foreign assets held over interest owed to foreigners on their holding of our assets, and (iii) excess of foreign aid coming in minus aid going out)
Capital (Financial) Account—net change in domestic assets owned by foreigners or foreign loans (net foreign direct and portfolio investments coming into the country)
Change in Official Reserves—net accumulation of foreign currency
Current Account + Capital Account = Change in Official Reserves
3. Connection to National Income Accounts
NX
G
I
C
Y
+
+
+
=
{
4
4
3
4
4
2
1
4
3
4
2
1
Assets
Foreign
of
Purchase
Net
Saving
National
Balance
Trade
I
G
C
Y
NX
-
-
-
=
Þ
Trade Balance is largest component of Current Account
Net Purchase of foreign assets (including currency) = (-) Capital Account + Change in Official Reserves
4. US Trade Deficits (NX < 0)
Industrial Revolution (1870 to 1910)
Current Times (1980 to Present)
