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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

How does the bottom portion of Figure 23.3, showing the international flow of investments and capital, differ from the upper portion?

Chapter 23, Problem 9SCQ, How does the bottom portion of Figure 23.3, showing the international flow of investments and , example  1

Chapter 23, Problem 9SCQ, How does the bottom portion of Figure 23.3, showing the international flow of investments and , example  2

To determine

The international flow of investments and capital.

Explanation

The figure shows the flow of goods and services, investment and payments between one country and the rest of the world.

The top line shows the flows of goods and services from the home country to the rest of the world. The second line shows the payment received for the export made to the rest of the world. Similarly, the third line shows the flow of goods, services, and investment towards the home country form the rest of the world. The fourth line shows payment for these imports. The flow of goods, services, and funds are recorded in − current account and financial account.

The line first and third is the part of the current account while line two and four are part of the financial account...

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