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Bop Of U.s.a.

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Economics
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Saudi electronic university
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Running head: DISCUSSION 1
U.S.A. Balance of Payments in 2018-Discussion
Student’s Name
Institutional Affiliation
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DISCUSSION 2
U.S.A. Balance of Payments in 2018-Discussion
Country selection and determination of current account balance
The selected country for analysis in this paper is the United States of America. McBride
and Chatzky’s article will facilitate the analysis of the current account balance of the United
States of America. According to McBride and Chatzky (2019), the United States of America
operated on a negative balance of payments or current account deficit. Some of the main reasons
for the trade deficit were attributed to the high rates of real interests charged by the country and
overvaluation of the dollar, and more government spending as well as importing more products
than the country exports.
Implications for the trade deficit
One of the implications for the trade deficit in the United States is that the country has
been having unfavorable terms of trade with her trading partners such as China, South Korea,
and Mexico. These countries have been technically exporting cheap products in the U.S. market,
thereby making customers divert their preferences for the low-priced items from these countries
(McBride & Chatzky, 2019). Eventually, this detrimental to the economy of the United States as
much of the revenues obtained by these foreign firms are repatriated back to their countries and
contributing less to the U.S. economy. Moreover, the penetration of cheap products from foreign
firms leads to the collapse of American firms that are developing, which could contribute
immensely to the GDP contribution of the country (Murray, 2019). Jobs for the Americans
would also be devastated as most of these firms come with their labor force from their countries
and diverting profits back to their home countries.
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Running head: DISCUSSION 1 U.S.A. Balance of Payments in 2018-Discussion Student’s Name Institutional Affiliation Date DISCUSSION 2 U.S.A. Balance of Payments in 2018-Discussion Country selection and determination of current account balance The selected country for analysis in this paper is the United States of America. McBride and Chatzky’s article will facilitate the analysis of the current account balance of the United States of America. According to McBride and Chatzky (2019), the United States of America operated on a negative balance of payments or current account deficit. Some of the main reasons for the trade deficit were attributed to the high rates of real interests charged by the country and overvaluation of the dollar, and more government spending as well as importing more products than the country exports. Implications for the trade deficit One of the implications for the trade deficit in the United States is that the country has been having unfavorable terms of trade with her trading partners such as China, South Korea, and Mexico. These countries have been technically exporting cheap products in the U.S. market, thereby making customers divert their prefere ...
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