| Chapter 15 Outline |
| VII. THE BALANCE OF PAYMENTS |
| A. Deficits, Surpluses, and Their Consequences
|
| 1. The balance of payments is a summary of all economic transactions between
the residents of one country and those of all other countries during a given
period of time. |
| a. These transactions include exports, imports, and various capital flows. |
| 2. Since the early 1980s, the United States has run a deficit in its current account and a surplus in its capital account. |
| a. Much of this deficit occurs because the United States imports more than
it exports. |
| 3. There is good reason to be concerned with the deficit. |
| a. The deficit is financed primarily through foreign investment in the United States. |
| | 1. This investment means that ownership of the nation's assets is transferred to foreigners. |
| | 2. As foreigners accumulate more of the nation's assets, they receive more income and interest from the United States. |