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2599534
US Economy
Description
Mind Map on US Economy, created by Andrew Mbuya on 27/04/2015.
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management
Mind Map by
Andrew Mbuya
, updated more than 1 year ago
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Created by
Andrew Mbuya
over 9 years ago
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Resource summary
US Economy
Balance of payment
Current account
Difference between exports and imports
Goods
Services
Other income( income from investments)
Payments to capital
Interest on loans
Transfers accounts
International Remittances
Financial accounts
Tracks changes in assets and liabilities
Inward foreign investmnets
Outward direct investments in foreign countries
Capital accounts
Reserves accumulation
Foreign assets that central banks owns
Use to manage forex
US consumption
Growing due to
Growing population
Low uNemployment
Cheaper goods abroad
Incentivizing consumers to continue to import
Appetite for energy, oil, which was imported
For this high deficit
US has to be financed by other countries, through exports
One country following a strong export strategy
China
Japan
Europe
How?
They are buying companies in the US
US is perceived to be a safe country to invest in
Strong US dollar:
Exports go down, because it's expensive to the rest of the world
Imports become relatively cheaper, leading to more importations
Induces consumption
Low interest rate
Leads to low savings, consumption rises
Low interest rates Leads to low US loans to foreigners
Who's buying these assets?
Central banks
Sovereign funds
Why?
Feel comfortable with the 'safe' asset
Export led growth: have pressure to appreciate their currencies
Then they will be less competitive
So their central banks will start buying US dollars and create demand for foreign currecy thus stopping their currency from appreciating
When these assets are big volume, changes in US dollar affects the values of their holdings
Thus they become sensitive to these changes
International reserves
World saves in dollars
Korea
Japan
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