Chapter 10 Macroeconomics

Current Account balance

Tracks all money flowing in and out of the country from buying and selling things, earning income and giving or receiving gifts. 

What is current account balance split into?

Trade in goods, trade in services, income payments, and unilateral transfers

How to calculate account balance

(Exports - Imports) + Net Income + Net Transfers

Term that is used to describe those in one country buy from those in other countries

Imports

Trade

Broad term for general buying and selling of goods

Exports

Domestic goods and services that a country sells to people in other countries

Surplus

Situation where exports are greater than imports(Also known as trade surplus)

Goods and services that are produced in one country that are then sold in another

Exports

If exports ______ when an economy is said to have a trade surplus

Exceed imports

Recession tends to make a

Trade deficit smaller

Recession

A period when the economy slows down, people’s incomes and business profits tend to fall.

A country’s current account balance refers to what measure of balance of trade that includes…

Goods and services, international flows of income and foreign aid

To find current account balance (Which is trade deficit or surplus)

S + (M-X) = I + (G-T)

A country finds itself in a situation. A goverment budget deficit of $500. Total domestic savings of 1800 and total domestic physical captial investment of 1300. What is the current account balance?

deficit of 300 

In macroeconomics, a payment made by foreign firm to a U.S. investor looks like an

Export of a service

What all does merchandise trade deficit include?

It is balance of trade looking only at goods.

How to calculate Merchandise trade deficit?

Imported Goods - Exported Goods 

In 2010, a small country imported goods worth $500 billion and exported goods worth $443 billion. It exported services worth $248 billion and imported services worth $330 billion. Payments on investments abroad totaled $199 billion, while returns paid on foreign investments were $125 billion. Unilateral transfers from the country to other nations amounted to $94 billion. What was the country's merchandise trade deficit for 2010?

57 billion

Balance of trade

Any gap betweeen producers sell abroad and imports