Balalnce of Payment

1) Define “Balance of Payments” and find the current BOP stats for the U.S. (See BEA.gov link below) Is the U.S. running a surplus or deficit? Is this good or bad for the U.S. economy and why? Now compare the U.S. statistics to the European stats found within the second web link below. Which has the better stats?

(You might also want to watch the Investopedia video tutorial for Balance of Payments. Link below.)

http://www.investopedia.com/terms/b/bop.asp

http://www.bea.gov/

http://www.ecb.europa.eu/stats/html/index.en.html

2) Now, find the “services” component for the BOP and look at this figure over the last 3-5 years. What trend do you see? Do you think this trend will continue and why?

3) Define “Mercantilism” and find an example of a country that might be utilizing this strategy. Is this good for the U.S. or not? What are 2 benefits of this strategy for the country that employs it successfully?

4) Visit the IMF.org web-site. What role does the IMF play in dealing with BOP issues?