Managerial Economics Master Essay Example | Topics and Well Written Essays - 500 words

Managerial Economics Master - Essay Example The current account contains the import and export items of goods and services as well as transfer payments including net investment income. Deficit in current account is often regarded as problematic. The existence of current account deficit often signifies negative perception in the attractiveness of a country's commodities and investment instruments. However, it is also important to look at the causes of the current account deficit being experienced by US. The current account deficit being experienced by the United States can be attributed to the "expansion of the fiscal deficit, decline in private saving rate, productivity growth, slump in foreign domestic demand, and improvements in global financial intermediation" (Ferguson). The current account is also largely attributed to the appreciation of the US dollar relative to other currencies. The attractiveness of dollar in the global market dampened the demand for US commodities which highly discourages the exports of US commodities. In contrast, imports appear cheap to US residents. The International Monetary Fund expressed that the current account deficit in the US is not a current problem.