Define the official settlements balance. Is there any difference ...

[leo leo]

Define the official settlements balance. Is there any difference between the United States and other countries in terms of what this balance measures? How does this affect the ability of the countries to run current account deficits?
 
  What will be an ideal response?

Question 2

The finding that U.S. exports tend to come from labor-intensive industries, while U.S. imports are produced using relatively capital intensive techniques is known as
 
  A) the Leontief paradox.
  B) the balance of trade enigma.
  C) the Heckscher-Ohlin paradox.
  D) the Krugman finding.

[samiel-sayed]

Answer to Question 1

For most countries it measures international reserve changes. For the United States, it records changes in short-term U.S. liabilities held by foreign monetary agencies. This demand for dollar denominated short-term debt by foreign central banks permits the United States to finance current account deficits largely with dollars. Other countries must finance such deficits by selling foreign currency and, as a result, face a greater constraint on their ability to run deficits as they eventually run out of international reserves. Such a constraint does not exist for the United States.

Answer to Question 2

A

[leo leo]

Thank you

[samiel-sayed]

No problemo