By the end of this section, you will be able to:

Explain crowding out and its effect on physical capital investment
Explain the relationship between budget deficits and interest rates
Identify why economic growth is tied to investments in physical capital, human capital, and technology

By the end of this section, you will be able to:

Discuss twin deficits as they related to budget and trade deficit
Explain the relationship between budget deficits and exchange rates
Explain the relationship between budget deficits and inflation
Identify causes of recessions

By the end of this section, you will be able to:

Explain the national saving and investment identity in terms of demand and supply
Evaluate the role of budget surpluses and trade surpluses in national saving and investment identity

By the end of this section, you will be able to:

Apply Ricardian equivalence to evaluate how government borrowing affects private saving
Interpret a graphic representation of Ricardian equivalence

By the end of this section, you will be able to:

Explain merchandise trade balance, current account balance, and unilateral transfers
Identify components of the U.S. current account balance
Calculate the merchandise trade balance and current account balance using import and export data for a country

By the end of this section, you will be able to:

Identify three factors that influence a country's level of trade
Differentiate between balance of trade and level of trade

By the end of this section, you will be able to:

Explain the determinants of trade and current account balance
Identify and calculate supply and demand for financial capital
Explain how a nation's own level of domestic saving and investment determines a nation's balance of trade
Predict the rising and falling of trade deficits based on a nation's saving and investment identity

By the end of this section, you will be able to:

Identify three ways in which borrowing money or running a trade deficit can result in a healthy economy
Identify three ways in which borrowing money or running a trade deficit can result in a weaker economy

By the end of this section, you will be able to:

Explain the connection between trade balances and financial capital flows
Calculate comparative advantage
Explain balanced trade in terms of investment and capital flows

By the end of this section, you will be able to:

Analyze graphs of the current account balance and the merchandise trade balance
Identify patterns in U.S. trade surpluses and deficits
Compare the U.S. trade surpluses and deficits to other countries' trade surpluses and deficits

By the end of this section, you will be able to:

Explain real GDP, recessionary gaps, and inflationary gaps
Recognize the Keynesian AD/AS model
Identify the determining factors of both consumption expenditure and investment expenditure
Analyze the factors that determine government spending and net exports

By the end of this section, you will be able to:

Evaluate the Keynesian view of recessions through an understanding of sticky wages and prices and the importance of aggregate demand
Explain the coordination argument, menu costs, and macroeconomic externality
Analyze the impact of the expenditure multiplier