Article on large scale economic issues
Your hometown newspaper needs someone to write an
informative article on large scale economic issues. The reporter who spoke with
you before thinks of you, welcomes you home, and requests another article.
Click here to view a summary of disaggregated data drawn from information
provided on the 2000 U.S. balance of payments which is in the 2002 federal
document, Economic Report of the President, available on the web.
In addition to the balance of payments data presented above,
the Bureau of Economic Analysis’ document entitled, International Investment
Position of the United States
(http://www.bea.gov/bea/newsrel/intinvnewsrelease.htm) offers the following
information.
“At year-end 2002, the value of foreign investments in
the United States exceeded the value of U.S. investments abroad by $2,387.2
billion (preliminary) with direct investment valued at current cost. At
year-end 2001, foreign investments in the United States exceeded U.S.
investments abroad by $1,979.9 billion (revised).”
Write a 2-3 page article on the United States’s current
account deficit. The reporter will edit your material down to a usable length
but asked for plenty of material with which to start. She requests that you
answer the following questions:
1. What has
caused the U.S. run a merchandise trade deficit year after year since the early
1980s?
2. Is the
current account a deficit problem? Explain.
3. Is the
trend of the international investment position of the U.S. problematic? Why or
why not?
4. How is
the current account related to a country’s business cycle?
5. What is
the relationship between a country’s net financial inflow and its current
account?
How does the U.S make adjustments for the balance of payment
issues?
