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Current Account Deficit, Real Earnings

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1.) A current account deficit is a very healthy thing. If we can get foreigners to give us real goods and services and talk them into taking pieces of paper in return, why should we want anything different?Do you agree or disagree with this statement? Discuss

2.) In 1982 to 1984 the base period used for the consumer price index, the average earnings of construction workers were $442.74 per week. By 1989 the earnings of construction workers had reached $506.72 per week, but the consumer price index had risen to 124.0. What were construction workers' real earnings in 1989 stated in 1982-1984 dollars?

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1) A current account deficit is a very healthy thing. If we can get foreigners to give us real goods and services and talk them into taking pieces of paper in return, why should we want anything different? Do you agree or disagree with this statement? Discuss

A current account deficit means that we are buying more goods and services from foreigners than they are buying for us. A current account deficit means that there is a financial and capital account surplus as current account + financial account + capital account = 0 (from the Balance of ...

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Discusses Current Account Deficit, Real Earnings adjusted for inflation

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Current events

In light of recent events, in an open economy like the US, assuming a zero current account balance. What happens to investment, real interest rates, current account balance and national saving of the US economy with the following events?
a. The US Congress and Mr. Obama introduce a "buy only American" policy in its legislation, which has the effect of driving up the cost of capital equipment
b. A technological breakthrough increases the quality and speed of mainframe computers a capital equipment used in many industries thereby increasing the future earnings in those industries
c. A decision by the US to use fiscal policy to run a fiscal deficit, mainly through unprecedented heavy spending, to stimulate the US economy

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