Abstract

The caselet explains the reasons for current account deficit (CAD) in the US economy. It also explains the effect of US CAD on different economies of the world. The caselet also discusses the measures that need to be taken by an economy to maintain international trade balance.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Possible reasons for the US current account deficit
• Increasing current account deposit of US and its impact on Asian banks
• Investment flow from Europe for US treasury bonds.

Keywords

Current Account Deficit (CAD), Gross Domestic Product (GDP), Foreign Direct Investment (FDI), globalization, outsourcing, trade deficit, Net International Investment Position (NIIP), Federal Reserve, Inflation, United Nations, European Central Bank (ECB)