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Statements

Subject Item
dbr:Internal_balance
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Internal balance
rdfs:comment
Internal balance in economics is a state in which a country maintains full employment and price level stability. It is a function of a country's total output, II = C (Yf - T) + I + G + CA (E x P*/P, Yf-T; Yf* - T*)Internal balance = Consumption [determined by disposable income] + Investment + Government Spending + Current Account (determined by the real exchange rate, disposable income of home country and disposable income of the foreign country). XX = CA (EP*/P, Y-T, Yf* - T*)External balance = the right amount of surplus or deficit in the current account.
dct:subject
dbc:Unemployment dbc:Inflation
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1725826
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941110113
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dbr:Floating_exchange_rate dbr:Price_level_stability dbr:Fiscal_policy dbc:Unemployment dbr:Full_employment dbr:Economics dbr:Monetary_policy dbr:Current_account_(balance_of_payments) dbc:Inflation dbr:Fixed_exchange_rate
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Internal balance in economics is a state in which a country maintains full employment and price level stability. It is a function of a country's total output, II = C (Yf - T) + I + G + CA (E x P*/P, Yf-T; Yf* - T*)Internal balance = Consumption [determined by disposable income] + Investment + Government Spending + Current Account (determined by the real exchange rate, disposable income of home country and disposable income of the foreign country). External balance signifies a condition in which the country's current account, its exports minus imports, is neither too far in surplus nor in deficit. It is signified by a level of the current account which is consistent with the maintenance of existing (or growing) levels of consumption, employment and national output over the long term. It is notated by XX = CA (EP*/P, Y-T, Yf* - T*)External balance = the right amount of surplus or deficit in the current account. Maintaining both internal and external balances requires use of both monetary policy and fiscal policy. That is one reason why floating exchange rates may be superior to fixed exchange rates. Under fixed exchange rates, governments are not usually free to employ monetary policy. Under floating rates, countries can use both.
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