CHAPTER18Macroeconomicsin an Open EconomyChapterOutlineandLearningObjectives4F80席2F60席3F80席18.1TheBalanceofPayments:M2208Linking the United Statesto外儿the International Economy一18.2 TheForeign Exchange新3了时种低McDonald'sMarketandExchangeRatesMcnonalds18.3 TheInternationalSectorandNational Saving andInvestment18.4 TheEffectofaGovernmentBudgetDeficitonInvestment18.5 MonetaryPolicy andFiscalPolicy inanOpenEconomy
1 Chapter Outline and Learning Objectives 18.1 The Balance of Payments: Linking the United States to the International Economy 18.2 The Foreign Exchange Market and Exchange Rates 18.3 The International Sector and National Saving and Investment 18.4 The Effect of a Government Budget Deficit on Investment 18.5 Monetary Policy and Fiscal Policy in an Open Economy CHAPTER 18 CHAPTER Macroeconomics in an Open Economy
Linkagesbetween CountriesUntil now, we have mostly ignored the linkages between countries atthe macroeconomic level.But countries are linked:· By trade in goods and services. By flows of financial investmentIn this chapter, we will consider howthese linkages work, and whatthe implications are for fiscal and monetary policy.@2015PearsonEducation,Inc
© 2015 Pearson Education, Inc. 2 Linkages between Countries Until now, we have mostly ignored the linkages between countries at the macroeconomic level. But countries are linked: • By trade in goods and services • By flows of financial investment In this chapter, we will consider how these linkages work, and what the implications are for fiscal and monetary policy
TheBalanceofPayments:Linking the United States to the International Economy18.1LEARNINGOBJECTIVEExplainhowthebalanceofpaymentsiscalculated.@2015PearsonEducafion,lnc
LEARNING OBJECTIVE © 2015 Pearson Education, Inc. 3 The Balance of Payments: Linking the United States to the International Economy 18.1 Explain how the balance of payments is calculated
OpenEconomiesToday it is routine for consumers, firms, and investors to interact withtheircounterparts inforeign countries.A country that has interactions in trade or finance with other countriesis known as an open economy, as opposed to a closed economywhich has no interactions in trade or finance with other countries.No economy is completely closed;though afew countries,suchasNorth Korea, have limited foreign economic interactions.@2015PearsonEducation,Inc
© 2015 Pearson Education, Inc. 4 Open Economies Today it is routine for consumers, firms, and investors to interact with their counterparts in foreign countries. A country that has interactions in trade or finance with other countries is known as an open economy, as opposed to a closed economy, which has no interactions in trade or finance with other countries. • No economy is completely closed; though a few countries, such as North Korea, have limited foreign economic interactions
U.S.BalanceofPayments,2012CURRENTACCOUNTA good way to understandExports ofgoods$1,561economicinteractionswith-2.303Imports ofgoodsother countries is by-742Balance of trade649Exportsofservicesexamining the balance of-443Importsofservicespayments (BoP): the record207Balance ofservicesof a country's trade with other776Incomereceivedoninvestmentscountries in goods, services,-552Income payments on investments224and assets.Netincomeon investments-130NettransfersIt is composed of the current-440Balanceon current accountaccount: the record of theFINANCIALACCOUNTcountry's net exports,Increaseinforeignholdingsofassetsin544theUnitedStatesnetincome oninvestmentsIncreaseinU.S.holdingsofassetsin-105foreign countries439and net transfers..Balanceonfinancialaccount7BALANCEONCAPITALACCOUNT-6Statistical discrepancyTable 18.1Thebalance ofpayments,0Balanceofpayments2012(billionsofdollars)5@2015PearsonEducation,Inc
© 2015 Pearson Education, Inc. 5 U.S. Balance of Payments, 2012 A good way to understand economic interactions with other countries is by examining the balance of payments (BoP): the record of a country’s trade with other countries in goods, services, and assets. It is composed of the current account: the record of the country’s net exports, net income on investments, and net transfers. The balance of payments, 2012 (billions of dollars) Table 18.1 FINANCIAL ACCOUNT Increase in foreign holdings of assets in the United States 544 Increase in U.S. holdings of assets in foreign countries −105 Balance on financial account 439 BALANCE ON CAPITAL ACCOUNT 7 Statistical discrepancy -6 Balance of payments 0 CURRENT ACCOUNT Exports of goods $1,561 Imports of goods −2,303 Balance of trade −742 Exports of services 649 Imports of services −443 Balance of services 207 Income received on investments 776 Income payments on investments −552 Net income on investments 224 Net transfers −130 Balance on current account −440