Sample Essay
The internal and external balance is are managed through the Keynesian model which incorporates consumption as a function of the disposable income and the current account is associated with the real exchange rate (Reinert et al., 2009). The internal balance and equilibrium in the product market is achieved when the economy is facing full employment levels and stable prices in the market.
However shifts in the internal balance can occur when the unemployment occurs or inflation occurs in the market with increasing prices indices. In the money market internal equilibrium is achieved the internal balance can be adjusted through interest rates and the supply of money in the market. As a result the in order to improve the internal balance, the United States economic policy needs to focus on improving the consumption in the nation which needs to be supported by increased disposable income and opportunities for employment for the public. The increased employment will result in higher disposable income available to the public which can in turn be used in consumer spending to generate more economic activity and positive GDP results.
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