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Is the trend of international investment position of US problematic?

The trend is problematic simply because of the size of the deficit. It is unlikely that the world would call in its debts from the US, so catastrophe of that nature will not occur. However, the present deficit is not sustainable. The increase in consumer goods imports has been funded largely by consumer debt and the American consumer is reaching debt saturation. Moreover, the governments deficit spending places more burden on public funds. This increase in public deficit in the 00s could potentially negate any Pitchford effect. Also, the size of the US current account deficit means that any structural readjustments will have a significant impact on the world economy[2]

How is the current account related to a countrys business cycle?

The current account is related to the business cycle in many ways. One is that the types of imports and exports will be affected by the business cycle. In a slumping economy, imports decrease, but exports may hold steady. Another way in which the business cycle is related to the current account is that measure taken to address business cycle issues, such as trade barriers, subsidies or exchange

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