POSC 182 Lecture 27 2010

POSC 182 Lecture 27 2010 - POSC 182: Politics and Economic...

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POSC 182: Politics and Economic Policy Unit 5: International Economic Policy Making March 10, 2010
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About the Final Exam Time : Tuesday, March 16 from 3-6pm Location : HUMN 400 ( Not UV 9) Bring : Scantron and Bluebook Format : Multiple choice and short answer Covers : Mostly the second half, but also some of the main concepts that were covered in both the first and the second half. Hint : Go over the lecture slides first, then the readings. Readings supplement the lectures.
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Balance of Payments Current Account (CA): The balance of trade between exports and imports (e.g. trade surplus or deficit) Capital Account (KA): The balance of capital outflows and inflows Official Reserve Transactions (ORT): Transactions by the Central Bank to make up the gap between Current Account and Capital Account Balance of Payments=CurrentAccount-CapitalAccount
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Managing Trade To be sustainable, current accounts must be offset by capital accounts If you import more than you export, you need to have more inflows of capital than outflows of capital to pay for imports. (e.g. Chinese investors in US assets). BP cannot be negative for too long. If a country spends more on imports than they can raise from capital inflows, then the country needs to figure out a way to export more or import less A central bank may be able to stem the tide temporarily, but eventually a country needs to reduce trade imbalances or raise more capital
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Balance of Payments Crisis When a country cannot attract enough foreign capital or sell enough exports to pay for its
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This note was uploaded on 10/05/2010 for the course POSC 182 taught by Professor Schuelenberg during the Spring '08 term at UC Riverside.

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POSC 182 Lecture 27 2010 - POSC 182: Politics and Economic...

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