In open economies, policy makers are motivated by the goal of internal balance and external balance. Internal balance requires the full employment of a country’s resources and domestic price level stability, while external balance is attained when a country’s current account is neither so deeply in deficit nor so strongly in surplus. a. Discuss the government actions to avoid price-level instability resulted from under-and overemployment. b. Discuss the problems with excessive current account deficits and problems with excessive current account surplus.

In open economies, policy makers are motivated by the goal of internal balance and external balance. Internal balance requires the full employment of a country’s resources and domestic price level stability, while external balance is attained when a country’s current account is neither so deeply in deficit nor so strongly in surplus. a. Discuss the government actions to avoid price-level instability resulted from under-and overemployment. b. Discuss the problems with excessive current account deficits and problems with excessive current account surplus.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter15: International Trade And Finance

Section: Chapter Questions

Problem 12SQ

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