Eco372 week 5 individual assignment
Current State of the US Macro-Economy
ECO/372
Current State of the US Macro-Economy
The US macro-economy is largely dependent on maintaining good international relationships that foster fair international trade. International trade can be mutually beneficial for the US and countries around the world be utilizing specialization to obtain goods at the lowest cost. To fully understand how international trade affects our economy we have to look at the major factors, which include GDP, domestic markets, consumers, and foreign relations.
The effects of international trade on GDP Exporting goods and services generate revenue here so it is a component of G.D.P. Importing generates income abroad so it has a negative on G.D.P. calculations. So what this means is having more exports than imports add to G.D.P., but lower exports than imports contract G.D.P.
The effects of international trade on domestic markets
Consumers who buy foreign-made goods or goods that are made with foreign-made components contribute to international trade. That can be a positive move if the goods can be made more cost-efficiently in another country. International trade occurs when individuals, cities, regions and countries specialize in what they do best and trade the surplus (Colander, 2010). The standard of living increases due to specialization and trade for trading parties because they gain revenue on goods that they export and can import goods that they cannot manufacture cheaper than another country. Exports create income for us and have a positive effect on the GDP, while imports represent money spent elsewhere and can slow our economy down. The biggest factor to be considered with international trade would be the exchange rates for exports and imports. If our dollar depreciates, loses value against other currencies, the prices of imported goods is driven up and sales of these goods wane. Goods made in the US consequently become cheaper abroad and exports increase. The
ECO/372
Current State of the US Macro-Economy
The US macro-economy is largely dependent on maintaining good international relationships that foster fair international trade. International trade can be mutually beneficial for the US and countries around the world be utilizing specialization to obtain goods at the lowest cost. To fully understand how international trade affects our economy we have to look at the major factors, which include GDP, domestic markets, consumers, and foreign relations.
The effects of international trade on GDP Exporting goods and services generate revenue here so it is a component of G.D.P. Importing generates income abroad so it has a negative on G.D.P. calculations. So what this means is having more exports than imports add to G.D.P., but lower exports than imports contract G.D.P.
The effects of international trade on domestic markets
Consumers who buy foreign-made goods or goods that are made with foreign-made components contribute to international trade. That can be a positive move if the goods can be made more cost-efficiently in another country. International trade occurs when individuals, cities, regions and countries specialize in what they do best and trade the surplus (Colander, 2010). The standard of living increases due to specialization and trade for trading parties because they gain revenue on goods that they export and can import goods that they cannot manufacture cheaper than another country. Exports create income for us and have a positive effect on the GDP, while imports represent money spent elsewhere and can slow our economy down. The biggest factor to be considered with international trade would be the exchange rates for exports and imports. If our dollar depreciates, loses value against other currencies, the prices of imported goods is driven up and sales of these goods wane. Goods made in the US consequently become cheaper abroad and exports increase. The
References: Colander, D.C. (2010). Macroeconomics (8th ed.). Retrieved from The University of Phoenix eBook Collection Database. U.S. Bureau of Labor Statistics http://www.bls.gov/eag/eag.us.htmhttp://www.bls.gov/eag/eag.us.htm