The balance of payments (BOP) can be defined as the statistical record of a countrys international transactions over a certain period of time presented in the form of double-entry bookkeeping.
The balance of payments accounts are those that record all transactions between the residents of a country and residents of all foreign nations. They are composed of the following:
The Current Account
The Capital Account
The Official Reserves Account
Statistical Discrepancy
The United States has experienced continuous current account deficits since the early 1980s.
Please discuss the following questions:
1-What do you think are the main causes for the deficits? Discuss the consequences of continuous U.S. current account deficits.
2 Discuss how a country can run an overall balance of payments deficit or surplus.
3. In contrast to the U.S., Japan has realized continuous current account surpluses. What could be the main causes for these surpluses? Do you believe that it desirable to have continuous current account surpluses? Discuss your reasons.
4. Comment on the following statement: Since the U.S. imports more than it exports, it is necessary for the U.S. to import capital from foreign countries to finance its current account deficits.
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