Macroeconomic Policy goals in an Open Economy External Balance: The Optimal Level of the Current Account External balance has no full employment or stable prices to apply to an economys external transactions An economy's trade can cause macroeconomic problems depending on several factors The economys particular circumstances Conditions in the outside world The institutional arrangements governing its economic relations with foreign countries Copyright C 2003 Pearson Education, Inc Slide 18-7Copyright © 2003 Pearson Education, Inc. Slide 18-7 Macroeconomic Policy Goals in an Open Economy ▪ External Balance: The Optimal Level of the Current Account • External balance has no full employment or stable prices to apply to an economy’s external transactions. • An economy’s trade can cause macroeconomic problems depending on several factors: – The economy’s particular circumstances – Conditions in the outside world – The institutional arrangements governing its economic relations with foreign countries