Current State Of The U.S. Macro Economy

Current State Of The U.S. Macro Economy

Contents

TOC o “1-3” h z u Import surplus PAGEREF _Toc380822109 h 1Impact of international trade PAGEREF _Toc380822110 h 1Government choices in regards to tariffs and quotas PAGEREF _Toc380822111 h 2Foreign exchange rates PAGEREF _Toc380822112 h 2Restricting imports into the U.S PAGEREF _Toc380822113 h 2

Import surplus

There can never be any country in the world which can survive on its own without being involved in international trade with other countries. Even the United States a super power can not have an economy which is growing or even raise the wages of our citizens unless we extend our trade beyond our borders and sell products and at the same time buy products from the rest of the population outside our country. We import a lot of goods from other countries. There are instances whereby there can be surplus in the goods that are imported in the United States. For instance the United States is a huge importer of automobiles. A surplus in the imported automobiles can have certain consequences on businesses as well as consumers. This will lead to a price drop of the automobiles. This is good news to the consumers as they will purchase them at lower prices. On the other hand this is bad news to the businesses since the price drop will make them incur a lot of losses.

Impact of international tradeInternational trade has various effects to the countries that take part in int.when it comes to the GDP,how international trade impacts it will be dependent on whether it is a surplus or defecit.in cases where a country exports more than it imports then it will result to a positive impact on the GDP,university students and domestic markets. A positive effect on the GDP leads to an increase in the job market .this will lead to an increase in money into the economy and the university students will have a purchasing power of the commodities they need to survive in school. On the other hand when a country imports more than it exports then it leads to a deficit .the deficit has a negative impact on the GDP, domestic market and the university students. This will lead to lack of employment opportunities and less money will be available in the economy. Therefore, university students will not be able to afford essential commodities (McTeer,2013)

Government choices in regards to tariffs and quotasAny government is mandated to make decisions regarding tariffs and quotas. Tariffs and quotas are both intended for controlling the quantity of imports which can get into the domestic market. When a government decides to be strict on the tariffs and quotas then it means that many countries will not be able to trade with the country. This will negatively impact the international relations between the two countries. This is because these two countries have trade restrictions and thus can not trade freely between each other. On the other hand if a government is not so strict on the tariffs and quotas then the country will be open for trade with other countries. This is due to the fact that there are no trade restrictions between these two countries. This will improve international relations between the tow countries and increase trade.

Foreign exchange ratesForeign exchange rate between two currencies is a rate that is used for the exchange of one currency for another. This is also termed as the value of a country’s currency against another. Foreign exchange rates are neither fixed rigidly nor are they flexible rigidly in any world’s economy. Foreign exchange rates are determined where there is an equal demand for and supply of foreign exchange (Moffat,2010).

Restricting imports into the U.SThe U.S imports so many goods from different countries all over the world. Trading of these goods has a crucial role to play when it comes to stabilizing the economy of the country. United States imports a lot of auto parts from China.in occasions of surplus in imports then there will be a trade deficit in the United States. However the United States does not restrict goods that come from china since they eventually benefit from the finished products when they export them regardless of the minor losses caused when importing. The United States can not minimize goods from other countries because they need them and also they somehow benefit from the imports from these countries.

References

McTeer,B. (2013) The Role of Foreign Trade on GDP.Forbes.Retrieved July4, 2013 fromhttp://www.forbes.com/sites/bobmcteer/2013/05/05/the-role-of-foreign-trade-on-gdp/Moffat,M. (2010).What Determines an Exchange Rate.Retrieved July4, 2013 fromhttp://economics.about.com/od/purchasingpowerparity/p/exchange_rate.htm