Krugmans International Economics 6th Edition instructors manual with answers to English exercises imch12CHAPTER 12 NATIONAL INCOME ACCOUNTING AND THE BALANCE OF PAYMENTS Chapter Organization The Natio

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The chapter then introduces the national income accounts, which are used to measure the size and composition of a country's economy. You can discuss the components of the national income accounts, including consumption, investment, government purchases, and net exports, and how they are used to calculate gross domestic product (GDP). You can also explain the difference between nominal and real GDP and the significance of capital depreciation, international transfers, and indirect business taxes in calculating national income.

Next, the chapter introduces the national income identity for an open economy, which incorporates international trade and capital flows. You can discuss the components of the current account, including exports, imports, and net transfers, and how they are related to national saving and investment. You can also explain the concept of foreign indebtedness and the importance of maintaining a sustainable current account balance.

The chapter then discusses the balance of payments accounts, which record all transactions between domestic and foreign residents. You can explain the components of the balance of payments, including the current account, the financial account, the capital account, and the statistical discrepancy. You can also discuss the implications of a deficit or surplus in the current account and how it is financed through the financial account.

Finally, the chapter concludes with a discussion of the United States' position as the world's largest debtor. You can discuss the causes and consequences of the United States' large trade deficit and foreign indebtedness, including the potential risks to the U.S. economy and its ability to continue borrowing from foreign investors.

Overall, this chapter provides a foundation for understanding the key concepts and tools used in international macroeconomics, including the national income accounts and the balance of payments. It also introduces some of the important issues and challenges facing the global economy, such as trade imbalances and foreign indebtedness