Chapter 15 Outline
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.
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