Of course, the U.S. economy does not exist in a vacuum. The economy of each of its trading partners - essentially, the economies of much of the world - affects the U.S. economy, in both subtle and direct ways.

Economic Factors
Here are the most important international economic factors to consider:

  • Balance of payments: This is the summary of all transactions between one country and all others over a specific period (typically a year), reflecting all payments and liabilities owed (debits) and obligations received (credits).

    See the What is the Balance of Payments article for more.

  • Exchange rates: This is the price of one country's currency expressed in another country's currency - that is, the rate at which one currency can be exchanged for another.

  • Foreign interest rates: If these are higher than U.S. rates, they could trigger a flight of investment capital out of U.S. dollars and into whatever currency those higher rates are denominated in.

There is no shortage of newspapers and magazines, TV and radio outlets, and websites providing data on business conditions and corporate profits. On the Series 7 exam you may encounter excerpts of data from a print source, which will test your understanding of the relationship between the data and current or potential conditions in the securities market.

For much the same reason, you should also be familiar with sources of information regarding business activity. A major print publication such as the Wall Street Journal is a great place to start.



Introduction

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