What is the balance of payments? Explain how s trade surplus in China with the US...

What is the balance of payments? Explain how s trade surplus in China with the US leads to a net capital outflow of investment from China to the US? Using the international macroeconomic model, show the model and describe the relation between output, spending, savings investment, trade balances, government budgets and capital investment across trading nations?

Expert Solution

Balance of Payments:

The balance of payments, also known as balance of international payments and abbreviated B.O.P. or BoP, of a country is the record of all economic transactions between the residents of the country and the rest of the world in a particular period of time.

Explain how s trade surplus in China with the US leads to a net capital outflow of investment from China to the US :

As the Trades were in the favor of the US the more Capital cash outflow would be taking place from china to the US which will help to grow as more capital outflow will make Currency stronger.

Using the international macroeconomic model, show the model and describe the relation between output, spending, savings investment, trade balances, government budgets and capital investment across trading nations :

jeff jeffy answered 2 years ago

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