International Trade and Finance speech notes Essay example

Submitted By Dmg5667
Words: 845
Pages: 4

The United States macro-economy depends on interest rates, exchange rates, trade deficits, the gross domestic product, and inflation. These can have an effect on how a company makes money by influencing how much a product or service costs and the availability of money, goods, and services. Macroeconomics can have a negative effect on business, but if the business executives know how to read a country’s national income accounts and balance of payments. The economy should be thought of as a whole. The macro tells the story about the economy aggregate performance, overall GDP, trade surplus or deficit, inflation Colander, 2010).
When there is a surplus of imports greater than exports, the nation is said to have a trade deficit. An export is a value of goods and services produced in the United States, and sold to other countries. The imports are services made in other countries and sold or bought in the United States. According to the Economic Policy Institute Scott and Wething stated Chinese auto parts are the fastest growing source of U. S. auto parts imports (Scott, Wething, 2012). The Chinese exports have increased 900 percent in a ten year period. The Chinese also have manipulated their currency illegally leaving the auto parts at an even lower price (Scott, Wething, 2012). The surplus of auto parts from China are hurting the American workforce as more car manufacturers are using the Chinese parts over American parts. The U. S. has lost over 400,000 jobs because of the import of these auto parts (Scott, Wething, 2012). There are other imports being brought into the American market that may impact the people working in United States such as electronics. The effects that international trade can increase or decrease the GDP, domestic markets, and also impact the university students. The world economy, weather disasters, and turmoil in counties will dictate the success or failure of the international trade. GDP prices can go up or down, the domestic markets can make money or lose with a potential for bankruptcy, and university students may not be able to receive Pell grants or loans for their education. Tariffs and quotas will have a large impact on international trade and the relationships between countries. A tariffs will generate revenue for a country as the government can make a percentage on each imported shipment (Colander, 2010). This is not an option with quotas and the money can add up with the tariff option. Quotas can lead to corruption and be hard to monitor. There will need to be people that monitor what product is allowed under the quota and what is not. This can lead to bad relationships with the country that is told their product is not allowed. Tight restrictions will also lead to smuggling in products, and that is never a good option because no one monitor the product and the government does not make anything. The foreign exchange rate, also known as the forex rate is the rate between two currencies and what the value is from one country to another country’s currency. The foreign exchange rate is a determining factor of a countries economic health. When a country has a higher currency makes exports more expensive and imports cheaper in the foreign market; a lower currency makes a country’s exports cheaper and its imports more expensive in a foreign market (investopedia, 2013). Some of the factors that have a role in determining the federal exchange…