econ3 10-3

econ3 10-3 - Is this being used for productivity? • Yes,...

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Q* Q** p 2-27-08 Ch. 10 continued - Balance of Payment o Current account been negative (because of net export) o Capital account capture flow of money (foreign money does affect) - U.S. capital Account o A record of foreign investment in the US minus US investment abroad. o Ex. Foreign investment in US $1212bil (money coming from other) US investment abroad US $444bil (money out of US) Net foreign investment $768bil Statistical discrepancy $10bil Capital account balance = $778bil Of course it’s not 100% accurate - Official reserves o The government holding of foreign currency. - Official settlement account o Record of change in official reserves o Ex. Official settlement account balance +$14bil (foreign government has this) Foreign government are holding more U.S. reserve o Current account balance - $792bil o Capital account balance $778bil When it’s positive we are borrowing
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Unformatted text preview: Is this being used for productivity? • Yes, so foreigners owner owns U.S. asset. o Official settlement account $14bil o Adds up to $ 0 -Net Lender (China, Saudi Arabia) o A country that is lending more to the rest of the world than it is borrowing from it. o Positive current account balance o Negative capital account balance-Net borrower o a country that is borrowing more from the rest of the world than it is lending to it o negative current account balance o positive capital account balance Short run Long run Price and wage are sticky Firm will change its price and wage Price of restaurant and because customers doesn’t like change Anything can change Usually doesn’t change price-a Firm slightly different by different firms *short run supply- price is fixed but increase quantity E1 = normal E2 = hiring extra workers...
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This note was uploaded on 12/02/2009 for the course ECON econ taught by Professor For got during the Spring '09 term at UCSD.

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econ3 10-3 - Is this being used for productivity? • Yes,...

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