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While that assessment may be "too pessimistic", it continued, the "threat of a serious downturn for the US is as great as it has been at any time in the past decade."
The IS, LM, BP Model.
When we open the economy to international transactions we have to take into account the effects of trade in goods and services (i.e. items in the current account) as well as trade in assets (i.e. items in the capital account). Opening the economy to international trade in goods and services means that we have to take into account the increased demand for our goods by foreigners (our exports), as well as the decreased demand for our goods that occurs because we purchase foreign goods (i...
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