The balance of payments consists of the current account, the capital account, and the financial account. -Explain these three different accounts of the balance of payments. -Then, consider how the United States has been a trade deficit country for over 50 years. -Is it economically healthy for the United States to be a long-term trade deficit country? -Finally, how can the U.S. balance of payments be 0 or close to 0 (with a small statistical discrepancy) when the United States is a trade deficit country? Explain in detail.
Fiscal policy is implemented by the federal government, using government spending or taxes whereas monetary policy is implemented by the Federal Reserve, using open market operations, discount rates, and reserve requirement ratios. -How would (expansionary or contractionary) fiscal policy and monetary policy affect the current account – exports and imports in goods and services – and the exchange rate, respectively? -In what kind of global economic situation would (expansionary or contractionary) fiscal policy and/or monetary policy be used?
Describe the common causes of global financial crises. -Analyze the specific causes of the 2007-2009 global financial crisis. -Choose one country other than the United States, and address the following: -Compare and contrast the impacts of the 2007-2009 global financial crisis on this selected economy with the impacts on the U.S. economy. -Summarize how the country’s government responded to the crisis. -Classify the country’s current economic situation within the world economy.
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