In open economies, policy makers are motivated by the goal of internal balance and external balance. Internal balance requires the full employment of a country’s resources and domestic price level stability, while external balance is attained when a country’s current account is neither so deeply in deficit nor so strongly in surplus. a. Discuss the government actions to avoid price-level instability resulted from under-and overemployment. b. Discuss the problems with excessive current account deficits and problems with excessive current account surplus.

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