#5: The International Economy

When in relation to the US economy, there are two types of economies:
1. Open economies: It means that one country has many economic and financial transactions with another country. Open to international trade and capital flows.

2. Closed economies: North Korea, Cuba are 2 examples. They have very limited economic and financial transactions with other countries.

Most countries in North America, East Asia, Western Europe are open are increasingly becoming open (especially many parts of Asia).

Most countries worried about US economy, because what happens there will affect what happens over there.

Trade Balance - The difference between imports and exports.
If imports < exports = trade surplus
exports < imports = trade deficit.

Before 1980 the US were in a trade surplus to trade deficit now.

What significance does trade surplus/deficit have? Why? And how does a country go from a trade deficit to trade surplus, or vice versa? Let's discuss.