individual Project
Pricing and Exchange Rates
900 words
Assignment Description
One of the more important measures in regard to international economics is the balance of payments. Think of it as a national accounting measure that looks at the flow of goods and services into and out of an economy in a given period of time. It also shows capital flows into and out of a country. Until 1980, the United States tended to run a positive-to-neutral balance of payments position and was a creditor nation. In the course of the past 30 years, the United States has moved to a negative balance of payments and to being a debtor nation.
Review and discuss the following:
- Discuss the importance of the balance of payments as an accounting measure.
- Discuss the current account and its components and the capital and financial accounts and their components.
- How important is the U.S. deficit in traded goods in regard to the balance of payments?
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References
Hellerstein, R., & Tille, C. (2008, June). The changing nature of the U.S. balance of payments. Current Issues in Economics and Finance, 14(4). Retrieved from https://www.newyorkfed.org/
Stein, H. (2008). Balance of payments. The Concise Encyclopedia of Economics. Retrieved from http://www.econlib.org/
Answer preview
The balance of payments revolves around the transactions taking place in their current and capital accounts (Terra, 2015). Current accounts house transactions related to the exported and imported goods and services, remittances made by citizens working in foreign countries, as well as returns earned on investments made in foreign nations. Countries typically engage in numerous trades and monetary transfers. Some of them are visible, while others are invisible. They can also be unilateral transfers or other forms of payments. Visible trades encompass transactions centered on tangible goods. Imported and exported services form part of the invisible trade (Terra, 2015). Unilateral transactions are monies received by citizens from people in foreign destinations and funds obtained by citizens due to them liquidating investments they made in other countries.
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