Readers Question: I’m currently reading ‘Crisis Economics’ (by N.Roubini) at the moment and I don’t get some stuff in the book. When it was talking about the current account balance, the book referred to it as a balance between national savings and national investment, but I don’t quite understand this. The Current account on the …
Readers Question: Can you please discuss the nature of the current account deficit and the exchange rate in the UK along with the theory that would suggest there is a relationship between the exchange rate and the current account. A current account deficit implies the value of imports of (goods/services/investment incomes) is greater than the …
The capital account measures transfer in assets and liabilities. For example, this may involve a Japanese firm building a factory in the UK. This is counted as a credit on the UK Capital Account. The Capital account can also involve the purchase of securities and liabilities, for example, a Japanese Banker buying UK Government securities. …
Readers Question: Can you explain the short-term and long-term effects of Osborne legislating that there must be budget surpluses in any year when growth exceeds 1%, which is almost every year, whilst we have a rather large current account deficit. What will be the effects of this on private sector companies, public investment, households, the …
Readers Question: Can you tell what Portugal has done to reduce the Current Account GDP deficit so steeply? The reduction in the Portuguese deficit is quite striking. In researching the answer to this question, I came up with a different post – The Portuguese Economic crisis From what I can gather, essentially, the rapid reduction …
There was reduction in the surplus on the current account of the French balance of Payments between 1998 and 2000. Essay Question: Using the data, assess whether this reflects a deterioration in the performance of the French economy. AQA (15) The current account measures the balance of trade in goods and service between France and …
Readers Question: How can a smaller government fiscal deficit cause a larger international trade surplus? A smaller fiscal deficit means the government is reducing its borrowing. Therefore tax revenues must be increasing faster than government spending. A trade surplus means that the value of exports is greater than the value of imports. Suppose the government …
In the past four years, the German economy has experienced a torrid time. Whilst America has boomed, Germany has experienced the worst recession in decades, with the shock return of high inflation and falling real wages. How Germany Damaged its Own EconomyWatch this video on YouTube In the 2012 Euro debt crisis, it was southern …