SHORT QUIZ1. Why isn’t it bad that the US has a

deficit in its current account?2. If the Chile exports $625 billion, and

imports $610 billion, what does their current account look like?

3. If the Chile exports $625 billion, and imports $610 billion, what does their capital account look like?

4. Why does more trade lead to more opportunities within countries?

5. How would an increase in tariffs or quotas affect the US economy?

World Economy Goods/services Capital investments/loans

Net Capital outflows (NCO) = purchases of foreign assets by domestic

residents - purchases of domestic assets by foreigners

(Similar to capital account) NCO = NX Any transaction has an effect on both sides of

equation

China

Chile

Trade?

Factors to change trade

Think/pair/share Tastes, local and foreign Prices of goods (inflation/deflation) Exchange rates Incomes, local and foreign Transportation costs Government policies

USA: Current Account, changes? NCO?

Trading Blocs Free Trade Zones NAFTA Eurozone

Mercado Común del Sur

Simple Chile & Brazil Example

Exports $100billion to Brazil

Net Exports Current Account Capital Account NCO?

Imports $100 billion from Chile

Net Exports Current Account Capital Account NCO?

NCO = purchases of F. Assets by locals – purchases of domestic assets by foreigners

More complex Japan, China, India

Exports $100B to India & Japan

Imports $50 B from India & Japan

Net Exports Current

Account Capital Account NCO?

Imports $75B to China & Japan

Exports $25B to China and Japan

Net Exports Current Account Capital Account NCO?

NCO = purchases of F. Assets by locals – purchases of domestic assets by foreigners

Exports $75B to India & China

Imports $75B from India & China

Net Exports Current

Account Capital Account NCO?

Research a country Project Balance of payments Net importer/Exporter

(explanation of why) (oil situation)

NCO Trading blocs 5 export goods 3 imported goods Exchange rate between US, Euro,

Yen Graph: 10 year history of

exchange rate between US Dollar Cite your source

Choose 1:PosterPamphletEssayWebsite

Research a country Project Balance of payments Net importer/Exporter

(explanation of why) (oil) NCO Trading blocs 5 export goods 3 imported goods Exchange rate between US,

Euro, Yen Graph: 10 year history of

exchange rate between US Dollar

Cite your source

Choose 1:PosterPamphletEssayWebsite

Research a country Project Balance of payments Net importer/Exporter

(explanation of why) (oil) NCO Trading blocs 5 export goods 3 imported goods Exchange rate between US,

Euro, Yen Graph: 10 year history of

exchange rate between US Dollar

Cite your source

Choose 1:PosterPamphletEssayWebsite

Research a country Project Balance of payments Net importer/Exporter

(explanation of why) (oil) NCO Trading blocs 5 export goods 3 imported goods Exchange rate between US,

Euro, Yen Graph: 10 year history of

exchange rate between US Dollar

Cite your source

Choose 1:PosterPamphletEssayWebsite