Explain that the u.s. imports more than it exports, Financial Management

Comment on the subsequent statement: “Since the U.S. imports more than it exports, it is essential for the U.S. to import capital from foreign countries to finance its current account deficits.”

Answer:  The statement assumes that the U.S. current account deficit causes its capital account surplus. Actually, the causality may be running in the reverse direction: U.S. capital account surplus may result the country’s current account deficit. Suppose foreigners find out the U.S. a great place to invest and send their capital to the U.S., resultant in U.S. capital account surplus. This type of capital inflow will strengthen the dollar, hurting the United States export and encouraging imports from foreign countries, resulting current account deficits.

Posted Date: 5/8/2013 6:05:44 AM | Location : United States

Related Discussions:- Explain that the u.s. imports more than it exports, Assignment Help, Ask Question on Explain that the u.s. imports more than it exports, Get Answer, Expert's Help, Explain that the u.s. imports more than it exports Discussions

Write discussion on Explain that the u.s. imports more than it exports
Your posts are moderated
Related Questions
Define the basic motivations for a counterparty to enter into a currency swap.  Answer:  One major reason for a counterparty to enter into a currency swap is to exploit the comp

Sensitivity analysis A sensitivity analysis studies the impact of specified variations in key factors on the initially-calculated NPV. The initial point for a sensitivity analy

you just started your first job, and you want to buy a house within 3 years. you are currently saving for the down payment. you plan to save $5,000 the first year. You also anticip

Debit Credit Accounts receivable $300,000 Allowance for doubtful accounts $35,000 Sales for 2010 were $5,500,000. All sales were sales on account. At the end of each month

MBS are the most complicated securities that are sensitive to interest rates. The factors that affect the price of MBS are varied and most of th

Q. What do you mean by Accrued Expenses? Accrued expenses are the expenses which have been incurred but not yet due and hence not yet paid also. These simply represent a liabil

Methods of workers participation in management: the various methods of workers participation in management are as follows: 1. Informative participation: it refers to sharing of

The management of Nelson plc wish to estimate their firm's equity beta. Nelson has had a stock market quotation for only two months and the financial management feels that it would

The number of properties sold every month indicates that Thorne Co experiences seasonal trends in its business. There is an sign that property sales are at a low level in winter an

Carr, C., Kolehmainen, K. and Mitchell, F. (2010) ‘Strategic investment decision-making practices: a contextual approach', Management Accounting Research, 21, 167-84. (a) What a