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    Nikolas93's Avatar
    Nikolas93 Posts: 3, Reputation: 1
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    #1

    Jun 12, 2016, 07:25 AM
    Two villages - Trade deficit
    Imaginary example: 1 Economy – Two villages – Same currency. Village 1 has current deficit relative to village 2. Does it not run out of cash at some point?
    Nikolas93's Avatar
    Nikolas93 Posts: 3, Reputation: 1
    New Member
     
    #2

    Jun 12, 2016, 07:25 AM
    Trade deficit areas under Common currency
    When a country has a current account deficit, exchange and interest rate change, and those “funds” come back in the economy either by borrowing or via investment (capital account surplus). What happens when there is common currency and exchange rates/interest rates do not change? For instance, how does the ECB allocate Euros from those countries who have surplus into the countries that have deficit?
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    Nikolas93 Posts: 3, Reputation: 1
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    #3

    Jun 12, 2016, 07:27 AM
    Current account deficit, surplus and investment
    Let’s say a foreign billionaire builds a huge hotel in New York, investment of 2billion dollars. Does this automatically mean that USA's current account deficit will increase by 2billion?

    recall: current account deficit = capital account surplus
    ScottGem's Avatar
    ScottGem Posts: 64,970, Reputation: 6056
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    #4

    Jun 12, 2016, 08:07 AM
    Please don't ask us to do your homework for you. Show us your work and we can critique it.

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