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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Hellerstein, R., & Tille, C. (2008, June). The changing nature of the U.S. balance of payments. Current Issues in Economics and Finance, 14(4). Federal Reserve Bank of New York. https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci14-4.pdf
Stein, H. (2008). Balance of payments. The Library of Economics and Liberty. http://www.econlib.org/library/Enc/BalanceofPayments.html