Positive Balance of Payments
I have a problem with the satement “Things will look excellent for the US if we could just get to where we are consistently executing a positive Balance of Payments.” Can someone in short comment on this statement?
Expert
Balance of payments is a measure of net flow of funds from a country; it consists of both long term and short term flow of funds. A positive BOP reflects that the country is gaining from long term and short term transactions in the world and hence, accumulating wealth. Therefore, if the US has a positive BOP then it means that it is accumulating wealth thereby benefitting the economy in the short run as well as long run.
Autonomous or public investment: It is a type of investment that is not of profit motivated.
Fixed exchange rate system (or pegged exchange rate system): This is a system in which exchange rate of a currency is fixed by government. This system makes sure stability in the foreign trade and capital movement.
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