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    What do international flows of capital have to do with trade imbalances?

    Given the high level of activity in international financial markets, it is typically believed that financial flows across borders are the real reason for trade imbalances. For example, the United States had an enormous trade deficit in the late 1990s and early 2000s because it was attracting vast inflows of foreign capital. Smaller countries that have attracted such inflows of international capital worry that if the inflows suddenly turn to outflows, the resulting decline in their currency could collapse their banking system and bring on a deep recession.

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Questions & Answers

Someone tells you "That theory has no practical value because it is abstract, it is not real , it exist only in the mind of the theorist". Refute the Statement.
johan Reply
Truly theory sometimes look like an abstract, but some theory has been tested scientifically and we believed they exist. just like the law of demand which States that the higher the price, the lower the quantity demanded vice versa. But the rule does not hold in luxury goods.
Ganiyu
Ty for the answer sir..😘
johan
explain estimation problem please.
Nnenna Reply
Which is the role of household in the Government policy?
Giada Reply
What is the role of household in the Government policy?
Giada Reply
households are very important because the consumption of the goods and services are by people. households play a big role in that
Raghava
And how about work? Can they influence the government policy through the work market?
Giada
yes household can influence government policy. you see it is all about the demand and supply of commodities. Demand generated by household has to be fulfilled by the industries which in turn ofcourse influence government policies
Rishav
Do the neoclassica theory and the Keynesian one have a different vision about the household's influence in the Government policy?
Giada
what are the causes of voluntary and involuntary unemployment?
JONATHAN Reply
involentary the unemployment is when say someone is working part-time but wishes to work full time
Warface
in most of economists view a person is involuntarily unemployed if he want to move for better wage rate at some point above the market equilibrium, that he stays right now.
Salman
what are the two type of intermediation and whats there differences?
Simonsakala Reply
This might help friend. ***economicshelp.org/blog/6318/economics/functions-and-examples-of-financial-intermediaries/
Ti
ok
Habeeph
I'm new myself. I couldn't explain it very well. That's why I gave the link.
Ti
OK tnx
Habeeph
i dont know sir pls explain anybody
Avinash
thanks...ti khu
Simonsakala
never worry
Habeeph
The are many types of intermediaries
Mohammed
You're welcome Simonsakala Musaka!
Ti
A lot of the content is verbatim what's in my College textbook except this book explains it more whereas my College Book seems to think I should already know haha
Ti
please help explain mpc
Nnenna Reply
MPC is partly the each income to expenditure..
Marusaha
s the proportion of an aggregate raise in pay that a consumer spends on the consumption of goods and services, as opposed to saving it.
Kalyango
it's simply how much of one's income spent on consumption. so if on the average people in an economy spend 65% of their income on goods and services and save 35%, the MPC for that economy is 0.65 and their MPS is 0.35. The MPS is how much of their income not spent, but saved. I hope this helps.
Georgina
Georgina explained it impeccably.
Thabiso
Consumption is defined as the usage of goods or services to satisfy human wants.
Bachabor Reply
What is Marginal Propensity to Consume (MPC)?
Bachabor
What is Marginal Propensity to Consume(MPC)?
Bachabor
MPC means that when disposable increase, personal consumer spending increases also.
Thabiso
When debit and credit entries on the balance of payments are not balanced what is it called?
Thabiso Reply
unbalanced balance sheet
Warface
Thank you very much.
Thabiso
what is consumption
Ameer
the use of goods and services by households
Sonali
What is economics?
munna Reply
what is demand
ddamba Reply
is the desire backed by ability to buy a certain commodity at given price in given period of time.
Kalyango
yes
Raj
yas
Ashutos
willingness is a must
Sumaya
what's macroeconomics?
munna
Macroeconomics is the study of how society as a whole (an entire country's economy) chooses to allocate and use scarce resources to produce, consume and exchange in the market
Baaba
Thanks!
munna
what is economy
Ameer
How do you distinguish leading indicators from coincident indicators to lagging indicators?
Thabiso Reply
What is externalities and environmental taxation
Ganiyu Reply
environmental taxes are kind of economics instruments to adress environmental problems.
Swapnil
What is the reason behind present increasing interest rate in Argentina? Why its currency is devaluating?
Saujanya
any one can explain what is paradox of thrift?
Sweet Reply
Paradox of thrift was popularized by the renowned economist John Maynard Keynes. It states that individuals try to save more during an economic recession, which essentially leads to a fall in aggregate demand and hence in economic growth.
pradeep
Paradox of thrift is a situation where recession causes people to tighten their belts. Reducing consumption and increasing savings. As a result people spend less, causing further fall in aggregate demand. As aggregate demand falls firm produce less and fire more idle workers. Increasing unemploymen
Zen
thank you
Sweet
When less people are employed, consumption from household fall even further, and the cycle continues. This results in a downward spiral of the economy. This is what Paradox of Thrift is.
Zen
What should happen: When people save more, the amount of fund that can be lent grows up i.e. supply of loanable fund grows in bank. This results in decrease in interest rate. This increases spending and spurs Economic growth.
Tutohar
What happens: During recession people save more resulting a drop in aggregate demand and thus drop in GDP.
Tutohar
This a paradox of thrift
Tutohar
thanks
Waqar
how is national income estimated using income approach?
Sweet Reply
gross domestic income+income from abroad-depreciation
vaishnavi
thank you
Sweet

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Source:  OpenStax, Macroeconomics. OpenStax CNX. Jun 16, 2014 Download for free at http://legacy.cnx.org/content/col11626/1.10
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