Responses to the following statement Essay

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Please post a response to the following statement and respond substantively to postings below. Monitoring of the various sub-accounts a country’s balance of payments activity is helpful to decision makers and policy makers on all levels of government and industry in detecting the underlying trends and movements of fundamental economic forces driving a country’s international economic activity.

1. A country’s balance of payments gives us the summary of the flow of funds in current account and capital account. Therefore by monitoring various sub-accounts will benefit the government to track their spending. In addition, they will be able to predict a country’s surplus or a deficit by monitoring the flow of funds. Sub accounts are very important since a country could be spending money on things which are not necessary and can ignore important investments. This way by looking a country’s sub account will give them a detailed view of their spending and profits.

2.It is important to monitor the various sub accounts in a country’s balance of payments. The balance of payments is the summary of all the transactions included in the current account and capital account, and it includes data over a given period of time. It is important to monitor the sub accounts, such as those in the capital account because it can help decision and policy makers on all levels of government and industry to be able to see how money is being spent in areas such as payments of merchandise and services. This will help to determine the balance of trade, and if there is a deficit. Monitoring these sub accounts is basically helpful because it helps to keep track of all funds whether they are inflows or outflows for the country, and also helps to monitor investments based on international economic activity.

3. I agree; monitoring the balance of payments can give key insight into trends. A firm could use the balance of payments to graph the changes quarter-over-quarter to identify import/export trends for different sectors in the economy. In conjunction with other information on demographics, the birth/death rate, income, and credit an MNC can position itself to better weather the business cycle. Macroeconomic trends and the impact of credit supply/demand are having a greater influence on a countries ability to grow (create wealth); in a global economy, being well versed in interpreting and forecasting a nations imports/exports can give an MNC an advantage over a competitor that does not explore such information.

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