Discovering Data In this problem you will use data from the Bureau of Economic Analysis (BEA) to investigate the dependence of the United States on foreign markets over time. Go to the BEA website at www.bea.gov and under the “Tools” tab open “Interactive Data,” then “National Data,” and then “GDP & Personal Income.” Open Section 4, Table 4.1, for “Foreign Transactions in the National Income and Product Accounts” and download all the annual data going back to 1969. (Hint: Modify the displayed table to get the appropriate frequency and range of years.)

a. The current account is the difference between “current payments to the rest of the world” and “current receipts from the rest of the world.” What is the latest estimate of the current account?

b. Create a graph that shows: current receipts, current payments, and current account over time.

c. In what year was the current account largest? How would you characterize its trend over time? How would you characterize the trends in receipts and payments?

d. The U.S. current account deficit grew significantly from the 1990s up until the financial crisis of 2008. In principle, this growth could have occurred because of falling receipts from abroad, increasing payments to foreign countries, or both. Which factor appears to have driven the growth in the current account deficit in this period?

e. What does the evolution of the three trends you plotted in part (b) tell you about the reliance of the United States on foreign markets? Does the country appear to be growing more open or more closed over time?

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Capital ($ millions) Labor (person-years) Capital/labor ($/person) Exports 2.55 182 14,000 Imports 3.1 170 18,200