JB's AP MACROECONOMICS
John Burkowski Jr.
Academy for Advanced Academics at Florida International University
Embedded Files
BALANCE OF PAYMENTS
CURRENT ACCOUNT
Net Exports (Balance of Trade)
Exports (goods/services) - inflow (+)
Imports (goods/services) - outflow (-)
Net Investment Income
Profits/Wages/Interest/Dividends Earned on Foreign Investments - inflow (+)
Profits/Wages/Interest/Dividends Paid to Foreign Firms - outflow (-)
Net Transfers
Foreign Public/Private Transfers to Domestic - inflow (+)
Domestic Public/Private Transfers to Foreign - outflow (-)
FINANCIAL (CAPITAL) ACCOUNT
Direct Investment
Foreign Purchase of Domestic Real Assets - inflow (+)
Domestic Purchase of Foreign Real Assets - outflow (-)
Foreign Purchase of Domestic Financial Assets - inflow (+)
Domestic Purchase of Foreign Financial Assets - outflow (-)
Other Investment
Foreign Interest-Earning Account in Domestic Bank - inflow (+)
Domestic Interest Earning Account in Foreign Bank - outflow (-)
Foreign Loan to Domestic Borrower - inflow (+)
Domestic Loan to Foreign Borrower - outflow (-)
CURRENT ACCOUNT + FINANCIAL (CAPITAL) ACCOUNT = 0
OFFICIAL RESERVES
Federal Reserve (central bank) steps in if...
Balance of Payment Deficit
Balance of Payment Surplus
#8 Foreign Exchange (FOREX)
#8 Foreign Exchange (FOREX)
Determinants of Exchange Rates:
T - tastes and preferences
I - relative income
P - relative price level
S - speculation
I - relative interest rates
Review Formulas:
Y↑ → S$↑, D$↓ → $↓ (U.S. Dollar depreciates)
Y↓ → S$↓, D$↑ → $↑ (U.S. Dollar appreciates)
PL↑ → S$↑, D$↓ → $↓ (U.S. Dollar depreciates)
PL↓ → S$↓, D$↑ → $↑ (U.S. Dollar appreciates)
i%↑ → S$↓, D$↑ → $↑ (U.S. Dollar appreciates)
i%↓ → S$↑, D$↓ → $↓ (U.S. Dollar depreciates)
EconReview - Jacob Reed
ACDC - Mr. Clifford's Video Reviews
International Trade, Balance of Payments, Foreign Exchange Market, Currency Appreciation/Depreciation
Unit 6 Macroeconomics - International Trade and Foreign Exchange
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