Fiscal Policy Team Paper Essay
Fiscal Policy Team Paper
The United States Financial Reputation on an International Level: If the United States surplus low and debt high will have an impact on obtaining resources to invest in production.
Most of the product the United States get is from other countries and will not change the employment rate that much. The United States can get more assets by exporting fewer goods than we import. By not trading goods as much as exporting the foreign investment becomes deficit. If the exports are greater than what is imported to the United States is out of balance with trade surplus. (About.com, 2013) A Domestic Automotive manufacturing (exporter):
When the United States is deficit in surplus and debt the foreign exchange rate is affected. The value of money in the United States will decrease in value if future predictions with debt are bad. As a result, automotive manufacturers will not have decline in sales which causes trade to be low and unemployment. If the United States can’t sell their goods to other countries it will cause a surplus and debt of domestic goods. (About.com, 2013) An Italian Clothing Company (importer):
The Decrease in trade will happen when the United States has an excess of the Italian clothing they do not have a demand for the products. The United States will export the overload of clothes to other countries before the United States is affected. When debt is high and the United States needs more clothing will sell assets at a lower price to cover demand of products.
It is bad when the United States have to borrow product from the company and will have to pay back the product price plus interest. When this occurs, the United States debt can get larger. In this process the economy will grow with an increase in GDP, and debt decreases. (About.com, 2013)
About.com. (2013). US Economy. Retrieved from http://useconomy.about.com/od/tradepolicy/p/5_trade_deficit.htm