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ECON final cheat - of production)… is it bad No b/c it is...

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Trade Restrictions- Tariffs and Quotas Tariff- tax imposed by importing country on imported goods Quota- limits the number of imported goods Balance of Payments Accounts (BOP) Records its international trading, borrowing & lending 3 BOP accounts (only 2 important) 1. Current Account- records payments for imports of goods and services abroad, net interest income paid abroad & net transfers 2. Capital Account- records foreign investment in the US and US investment abroad (current acct balance) CEB = E - I + net interest income – net transfer Net Borrower is a country that borrows more abroad than it spends 1960s US was a net lender 2000 US is a net borrower (total net borrowing is 35%
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Unformatted text preview: of production)… is it bad? No b/c it is financing investment • If borrowing is financing investments> generates economic growth, higher income> borrowing not a prob • If borrowing is financing consumption> higher interest payments> eventually consumption must be reduced Government Surplus/Deficit = T- G • If T>G has surplus, will lend to other sectors • If T<G has deficit, will borrow from other sectors Private Sector Surplus/Deficit = S- I • If S>I has surplus, will lend to other sectors • If S<I has deficit, will borrow from other sectors Net exports = Private Sector S/D + Gov Sector S/D • Y=C+I+G+X-M=C+S+I manipulate • X-M=S-I+T-G...
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