Week 6 Discussion 2 - In Global Economics & Political Influence

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Prior to beginning work on this discussion forum

• Review Chapters 18 and 19 of Macroeconomics Private and Public Choice.
• Review Offshore Profit Shifting and Aggregate Measurement: Balance of Payments, Foreign Investment, Productivity, and the Labor ShareLinks to an external site..

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 payments calculation, the trade deficit or trade surplus is called the balance on goods and services (Gwartney, et al., 2022, p. 389, exhibit 5, line 7). Business news reports commonly use the term, trade deficit, to discuss the U.S. economy, rather than your textbook’s preferred term, balance on goods and services. The trade deficit, or trade surplus, (Gwartney, et al., 2022, p. 389, exhibit 5, line 7) has the biggest impact on the current account.

Politicians often warn about problems associated with the U.S. trade deficit. For this discussion, cordially debate whether the U.S. should be concerned about the 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 or cons of the U.S. trade deficits.