You are the international sales manager for a high-tech equipment manufacturer based in the United States. Explain how the alternatives of a benign resolution or a hard landing to the United States current account deficit would impact your expectations for growth, inflation, interest rates, and exchange rates.
a. How will this alter your expected foreign sales in the year ahead?
b. What role would you expect the Chinese Central Bank to play in avoiding the hard landing?
c. What are the implications for growth, inflation, interest rates, and exchange rates in the short run from Chinese intervention?
d. In the long run?