International Trade Essay
The purpose of this paper is to prepare a speech that will be provided to a number of reporters that are not well versed with economics. In this paper I will put emphasis on international trade and foreign exchange rates and how those affect the GDP, domestic markets, and students. I will also outline some of the benefits on goods and services that are imported from other countries and how those contribute to our economy in the United States.
International Trade to GDP
In order to understand international trade it is important to recognize what the effects of international trade have on the GDP, domestic markets and university students. International trade is essentially when two or more countries exchange goods and services. Many countries export their goods and services to other countries and in turn may also import goods and services from other countries into their own. There have been exceptional achievements with technology, which have made it much easier to trade on an international level. The communication, as a result of these technology advancements, has improved exponentially and it has truly simplified this process. With that being said it can be confirmed that international trade has a profound effect on the GDP, domestic markets and even university students like me.
There are many countries that are rich in technology, like China and Japan, and others that have bountiful natural resources, like Iraq, that have a weighty impact on us specifically. The U.S. is one of the largest contributors to international trade and in fact our GDP is overwhelmingly impacted because we are huge import consumers. We rely heavily on products from other countries and import much more than what we export. This not only impact our GDP, thus lowering it since we are importing more than exporting, and also has an impact on our domestic markets because we are purchasing more from countries abroad. For a university student considering opening a business, as an example, when they graduate the effects can be extreme if they go into a market where there is a tough competitor abroad.
The government certainly makes many choices particularly when it comes to economics. The big question is how do government choices in regards to
tariffs and quotas affect international relations and trade? First and foremost it is important to understand that tariffs and quotas are in place to encourage the government to make choices on how much quantity they will agree to have imported and exported and additionally the amount of taxes that will be collected in order to avoid discarding of those goods or services. Foreign investors are encourages to play a role in international trade by having exchange rates in place. There are also government policies in place that aid to avert certain goods and services from entering our country. In essence the main objective of the government and the choices that they make regarding tariffs and quotas is to do what is best for our economy to keep it stable and lucrative.
Foreign Exchange Rates
In order to understand foreign exchange rates we must ask the question of what are they and how are they determined? Because economic growth within a country is important, the government makes certain that fiscal and monetary policies are in place to ensure that this growth continues. Because there are goods and services which are traded between different countries around the world, there are foreign exchange rate payments that are required to be paid for those exchanges. This foreign exchange rate will differ from country to country.
Naturally there are many people that have asked the question of why the U.S. does not simply restrict all goods coming in from China, as an example? Why can’t the U.S. just minimize the amount of imports coming in from all other countries as well? It is difficult to restrict imports from other countries particularly in the U.S where there is a large group of consumers who are demanding goods and services from other countries. In order to satisfy the demands of people who want these goods or services from other countries the government allows for this easy trading and does earn revenue from duties and taxes on these imports. This helps to boost our own countries economy.
Colander, D.C. (2010). Macroeconomics. (8th ed.). Boston, MA: McGraw-Hill/Irwin. United States Department of Labor. (n.d.). Bureau of Labor Statistics. Retrieved from http://www.bls.gov/eag/eag.us.htm. Trading
Economics. (2012). United States Consumer Confidence. Retrieved from http://www.tradingeconomics.com/united-states/consumer-confidence. CBS NEWS. (n.d.). US Consumer Spending Up, but Income Lags. Retrieved from http://www.cbsnews.com/8301-500395_162-57406993/us-consumer-spending-up-but-income-lags/. Appelbaum, B. (March 2012). The New York Times: As Fed Officials Prepare to Meet, They Await Clearer Economic Signals. Retrieved from http://www.nytimes.com/2012/03/12/business/as-fed-meeting-nears-it-awaits-clearer-economic-signals.html?ref=interestrates.
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 3 June 2017
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