1. 1. Why isn’t it bad that the US has a
deficit in its current account?
2. If the Chile exports $625 billion, and
imports $610 billion, what does their
current account look like?
3. If the Chile exports $625 billion, and
imports $610 billion, what does their
capital account look like?
4. Why does more trade lead to more
opportunities within countries?
5. How would an increase in tariffs or
quotas affect the US economy?

3.  Goods/services
 Capital investments/loans
 Net Capital outflows (NCO)
 = purchases of foreign assets by domestic residents
- purchases of domestic assets by foreigners
 (Similar to capital account)
 NCO = NX
 Any transaction has an effect on both sides of
equation

5.  Trade?

6.  Think/pair/share
 Tastes, local and foreign
 Prices of goods (inflation/deflation)
 Exchange rates
 Incomes, local and foreign
 Transportation costs
 Government policies

8.  Free Trade Zones
 NAFTA
 Eurozone
Mercado Común del Sur

9.  Exports $100billion
to Brazil
 Net Exports
 Current Account
 Capital Account
 NCO?
 Imports $100 billion
from Chile
 Net Exports
 Current Account
 Capital Account
 NCO?
NCO = purchases of F. Assets by locals – purchases of domestic assets by foreigners

10.  Exports $100B
to India &
Japan
 Imports $50 B
from India &
Japan
 Net Exports
 Current
Account
 Capital
Account
 NCO?
 Imports $75B to
China & Japan
 Exports $25B to
China and
Japan
 Net Exports
 Current
Account
 Capital Account
 NCO?
NCO = purchases of F. Assets by locals – purchases of domestic assets by foreigners
 Exports $75B
to India &
China
 Imports $75B
from India &
China
 Net Exports
 Current
Account
 Capital
Account
 NCO?

11.  Balance of payments
 Net importer/Exporter
(explanation of why) (oil situation)
 NCO
 Trading blocs
 5 export goods
 3 imported goods
 Exchange rate between
US, Euro, Yen
 Graph: 10 year history of exchange
rate between US Dollar
 Cite your source
Choose 1:
Poster
Pamphlet
Essay
Website

12.  Balance of payments
 Net importer/Exporter
(explanation of why) (oil)
 NCO
 Trading blocs
 5 export goods
 3 imported goods
 Exchange rate between
US, Euro, Yen
 Graph: 10 year history of exchange
rate between US Dollar
 Cite your source
Choose 1:
Poster
Pamphlet
Essay
Website

13.  Balance of payments
 Net importer/Exporter
(explanation of why) (oil)
 NCO
 Trading blocs
 5 export goods
 3 imported goods
 Exchange rate between
US, Euro, Yen
 Graph: 10 year history of exchange
rate between US Dollar
 Cite your source
Choose 1:
Poster
Pamphlet
Essay
Website

14.  Balance of payments
 Net importer/Exporter
(explanation of why) (oil)
 NCO
 Trading blocs
 5 export goods
 3 imported goods
 Exchange rate between US, Euro,
Yen
 Graph: 10 year history of exchange
rate between US Dollar
 Cite your source
Choose 1:
Poster
Pamphlet
Essay
Website