10.1 Measuring Trade Balances The trade balance measures the gap between a country’s exports and its imports. In most high-income economies, goods comprise less than half of a country’s total production, while services comprise more than half. The last two decades…
Learning Objectives By the end of this section, you will be able to: A nation’s level of trade may at first sound like much the same issue as the balance of trade, but these two are actually quite separate. It is perfectly possible for…
Learning Objectives By the end of this section, you will be able to: Because flows of trade always involve flows of financial payments, flows of international trade are actually the same as flows of international financial capital. The question of…
Learning Objectives By the end of this section, you will be able to: The close connection between trade balances and international flows of savings and investments leads to a macroeconomic analysis. This approach views trade balances—and their associated flows of…
Learning Objectives By the end of this section, you will be able to: As economists see it, trade surpluses can be either good or bad, depending on circumstances, and trade deficits can be good or bad, too. The challenge is…
Learning Objectives By the end of this section, you will be able to: We present the history of the U.S. current account balance in recent decades in several different ways. Figure 10.2 (a) shows the current account balance and the merchandise trade…
Learning Objectives By the end of this section, you will be able to: A few decades ago, it was common to track the solid or physical items that planes, trains, and trucks transported between countries as a way of measuring…
Figure 10.1 A World of Money We are all part of the global financial system, which includes many different currencies. (Credit: modification of “Money from around the world” by Images Money/Flickr, CC BY 2.0) Chapter Objectives In this chapter, you will learn about:…
9.1 Tracking Inflation Economists measure the price level by using a basket of goods and services and calculating how the total cost of buying that basket of goods will increase over time. Economists often express the price level in terms of…
Learning Objectives By the end of this section, you will be able to: When a price, wage, or interest rate is adjusted automatically with inflation, economists use the term indexed. An indexed payment increases according to the index number that measures…