Studied by 0 people
Looks like no one added any tags here yet for you.
What is the balance of payments (BOP)?
The balance of payments is a financial statement that summarizes a country's transactions with the rest of the world over a specific time period.
What are the two main components of the balance of payments?
The two main components of the balance of payments are the current account and the capital account.
What is included in the current account of the BOP?
The current account includes trade in goods and services, income from abroad, and current transfers.
What is included in the capital account of the BOP?
The capital account includes financial transactions related to investment in financial assets and liabilities, such as stocks and bonds.
What does a surplus in the balance of payments indicate?
A surplus in the balance of payments indicates that a country has received more money from foreign transactions than it has spent.
What does a deficit in the balance of payments indicate?
A deficit in the balance of payments indicates that a country has spent more money on foreign transactions than it has received.
What are the advantages of net importing?
Advantages of net importing include access to a wider variety of goods and services, potential cost savings from importing cheaper products, and the ability to meet domestic demand that exceeds local production capabilities.
What are the disadvantages of net importing?
Disadvantages of net importing can include trade imbalances that lead to deficits in the balance of payments, reliance on foreign producers which may lead to vulnerability in supply chains, and potential negative impacts on local industries.
What sparked the global financial crisis of 2007-2008?
The crisis was ignited by risky behaviors from financial institutions, a surge in the housing market followed by its collapse, high household debt levels, and inadequate regulatory oversight.
Which countries experienced the greatest impact from the global financial crisis?
Countries like the United States, Spain, Ireland, and Greece were among the most negatively affected during the global financial crisis.
How did Europe react to the global financial crisis?
Europe's response to the crisis involved implementing monetary stimulus measures, bailing out troubled banks, and introducing fiscal policies to stabilize economies.
What was meant by 'the sudden stop' in 2007?
'The sudden stop' refers to the abrupt halt in capital inflows to some economies, leading to financial distress and liquidity issues.
What choices did Spain face during the crisis in 2007?
Spain grappled with decisions regarding banking bailouts, austerity measures, and managing high unemployment rates as a result of the crisis.
What were the consequences after the global financial crisis?
The aftermath of the crisis included prolonged economic downturns, high unemployment rates, increased government debt, and significant regulatory reforms.
What is meant by the global savings problem?
The global savings problem relates to an imbalance where certain countries accumulate excessive savings, contributing to low demand and economic stagnation.
What solutions exist for managing excess savings?
Solutions for excess savings include increasing public and private investments, implementing fiscal stimulus measures, and enhancing demand for goods and services.
What issues have arisen with European policies in response to the crisis?
European policies since the crisis have been criticized for lacking a unified approach, leading to disparities in economic recovery rates among member states.
What changes are necessary to foster economic recovery?
To stimulate economic recovery, it is essential to increase demand through targeted fiscal policies, investments in infrastructure, and boosting consumer confidence.
Why is there a need for more demand in the economy?
Increasing demand is crucial for driving economic growth, reducing unemployment, and ensuring sustainable recovery following the global financial
