Normally I is constrained by S, However increasing CAD can increase I beyond the level of S, thus keeping AD constant. The increased I can push the LAS curve towards right, thus controlling inflation.
Thing I’m confused about is that (X-M) and unemployment is already decreasing so it’s not like CA deficit is causing it. It’s just a measure that’s showing what’s happening right
When you drew the diagram for Current A/c deficit, you only showed the AD curve shifting left. Would that only be caused by Demand side factors? And can AS curve also shift left indicating Current A/c deficit? Will THAT be caused by Supply-side factors?
could you evaluate by talking about state of the economy? if you're producing where AS is vertical (near full emplyoment) a deficit will not reduce production by much but will reduce prices etc..
Why is the aggregate supply line actually curved? I thought is must be in a straight line? What's the difference between SRAS and AS line on the diagram?
If a current account deficit means decrease in growth and increase in unemployment rate, how come that the US and the UK both have a low unemployment rate? Is it because we assume that their GDP is not affected much by the current account deficit?
Pawan sahani Other components of the current account might be in large surplus(the income balances). Furthermore, perhaps the financial/capital accounts of the BoP are in large surpluses offsetting a trade deficit
So you say AD decreases due to (X-M) being negative which therefore drags down AD etc etc but !!! CA deficit causes a decrease in the exchange rate (because supply of pounds increases to buy more foreign goods which decreases the price of pounds) so the pound is weak (WPIDEC) therefore demand for imported goods will decrease as theyre more expensive, and AD shifts right due to an increase in demand for domestically produced goods (imports relatively more expensive now) and also an increase in export demand as they're cheaper for foreign consumers. So therefore a CA deficit may Increase in AD causing demand pull inflation, economic growth, employment and overall would automatically improve the current account balance of payments due to a depreciation of the domestic currency as a result of the initial CA deficit. if you read this, is this wrong?
It's all about which effect dominates and which one comes first. Most like the AD left idea will happen first. Exchange rate adjustment and then benefit can take time
Okay, the United States of America has a trade deficit, this requires a federal fiscal deficit to fuel the leakages to the foreign sector. Is a federal deficit an issue though? No, not really. I would argue that the federal deficit aught to actually be higher. As it stands, real dollars, Dollars created through federal spending and injected into the private sector only accounts for 3% of the money supply. 97% of the money supply is private debt that needs to zero out plus interest whereas real dollars simply exist as an asset and does not need to zero out or have interest applied to it's existence. Private debt is inherently inflationary. Using the deficit compared to GDP is a completely useless measure. See Japan as proof of this. No, you cannot use Greece as a comparison as they are currency clients and not a currency issuer. It's apples and oranges.
don't stop bro everyone here loves you, sooooo grateful for your videos
I come to your videos even if I understand the topic. There's always something new to learn. Thanks a lot, sir.
such a good teacher, thank you
Thanks so much for all the effort, the examples you state in your videos are so helpful!
You’re the definition of amazing
"donkey years." LOL!
Lol
Lol
Lol
lol
@@montyrichmond446 haha were having the exam tomorrow arent we?
Thank for the incredible video!
Not me watching you one day before my o level send ups for extra information.
I love u that’s my confession and take my flowers 💐
Normally I is constrained by S, However increasing CAD can increase I beyond the level of S, thus keeping AD constant. The increased I can push the LAS curve towards right, thus controlling inflation.
Is he the next Sal Khan?
Thing I’m confused about is that (X-M) and unemployment is already decreasing so it’s not like CA deficit is causing it. It’s just a measure that’s showing what’s happening right
beautifully explained!!!! thankyou so much
Thanks sir. Well explained.
When you drew the diagram for Current A/c deficit, you only showed the AD curve shifting left. Would that only be caused by Demand side factors?
And can AS curve also shift left indicating Current A/c deficit? Will THAT be caused by Supply-side factors?
could you evaluate by talking about state of the economy? if you're producing where AS is vertical (near full emplyoment) a deficit will not reduce production by much but will reduce prices etc..
Many thanks.
Please do A2!
Nice video may I ask what exam board are you doing and is it possible if you can do test questions and answer them?
Why is the aggregate supply line actually curved? I thought is must be in a straight line? What's the difference between SRAS and AS line on the diagram?
Keynesian and classical diagrams
Thankyou
If a current account deficit means decrease in growth and increase in unemployment rate, how come that the US and the UK both have a low unemployment rate? Is it because we assume that their GDP is not affected much by the current account deficit?
sometimes find it useful to think: Strong Pound, Imports Cheap, Exports Expensive (SPICEE)
Ollie & Francesca Chapman hell no spice is da 🐐
what would a high current account deficit : gdp ratio be ? thanks
hi what is the best resources online for finding out up-to-date balance of trade info for trading FX please? (thank you)
good vid
Why is some countries BOP in surplus, in spite of huge trade deficit?
Pawan sahani Other components of the current account might be in large surplus(the income balances). Furthermore, perhaps the financial/capital accounts of the BoP are in large surpluses offsetting a trade deficit
Thank you so much for your guidence .hope we will have more discussion on near future
So you say AD decreases due to (X-M) being negative which therefore drags down AD etc etc but !!! CA deficit causes a decrease in the exchange rate (because supply of pounds increases to buy more foreign goods which decreases the price of pounds) so the pound is weak (WPIDEC) therefore demand for imported goods will decrease as theyre more expensive, and AD shifts right due to an increase in demand for domestically produced goods (imports relatively more expensive now) and also an increase in export demand as they're cheaper for foreign consumers. So therefore a CA deficit may Increase in AD causing demand pull inflation, economic growth, employment and overall would automatically improve the current account balance of payments due to a depreciation of the domestic currency as a result of the initial CA deficit. if you read this, is this wrong?
It's all about which effect dominates and which one comes first. Most like the AD left idea will happen first. Exchange rate adjustment and then benefit can take time
thanks alot ! i would just use my little theory as a long term evaluation i think
what is the disadvantage of current account surpluses?
increase govt. expenditure leading to inflation
MY FUCKING G
Okay, the United States of America has a trade deficit, this requires a federal fiscal deficit to fuel the leakages to the foreign sector. Is a federal deficit an issue though? No, not really. I would argue that the federal deficit aught to actually be higher. As it stands, real dollars, Dollars created through federal spending and injected into the private sector only accounts for 3% of the money supply. 97% of the money supply is private debt that needs to zero out plus interest whereas real dollars simply exist as an asset and does not need to zero out or have interest applied to it's existence. Private debt is inherently inflationary.
Using the deficit compared to GDP is a completely useless measure. See Japan as proof of this. No, you cannot use Greece as a comparison as they are currency clients and not a currency issuer. It's apples and oranges.
Would they ask us to define donkey years? hahaha only messing
shit joke tbf
Shit sense of humour tbf
How can you even be asked to reply
whats ulc
unit labour costs
DONKEY YEARS xdddd
Suraj it’s just a saying fam