Discuss how the balance of payments can influence exchange rates and purchasing power.

Discuss how the balance of payments can influence exchange rates and purchasing power.

Read Chapters 18 and 19 of Macroeconomics: Private and Public Choice.

In Chapter 9 you were introduced to the terms trade deficit and trade surplus. In Chapter 19 your view of imports and exports was expanded to include the balance of payments. As part of the balance of payment calculation, trade deficit or trade surplus is called balance on goods and services (p. 396, exhibit 5, line 7). Business news commonly use the term trade deficit to discuss the U.S. economy rather than your textbook’s favored term, balance on goods and services. The trade deficit or trade surplus (p. 396, exhibit 5, line 7) has the biggest impact on the current account.

Politicians often warn us about the problems of the US having a trade deficit. For this discussion, cordially debate whether the US should be concerned about our trade deficit.

For your initial post, first discuss how the balance of payments can influence exchange rates and purchasing power. Then take a position either for or against trade deficits. In your position, address the pros and cons of the U.S. trade deficits. There are many supplemental resources available to assist you with this debate.

Your initial response should be a minimum of 200 words. Graduate school students learn to assess the perspectives of several scholars. Support your response with at least one scholarly and/or credible resource in addition to the text.