Essays on Trade Deficit

Romania is the forty-sixth largest economy globally and ranked thirty-eighth in the most complex economy category based on the ECI (economic complexity index). The country has however faced a perpetual trade deficit (Steers, 456-461). Total exports into the country in 2009, for instance, amounted to $49.41 billion whereas the imports were $76.2 billion. In 2014 also, according to the ECI, Romania had an export of $71.4billion compared to $75.6 billion imports. In as much as an increase in trade is observable, the country is plagued by a perpetual trade deficit (Goschin, 24-37). To turn this scenario around and improve ...

The trade and investment relationship between Australia and China demolishes the theory of comparative advantage. According to Adam Smith and Ricardo, it makes sense for a country to focus on the production of goods and services it can do efficiently and purchase goods and services it produces less efficiently from other countries. When this theory is applied to the trade relationship between Australia, a rich country and China, a poor country, we arrive at a paradoxical outcome. The introduction of a free trade regime resulting in Australia-China trading relationship implies that Australian consumers will pay lower prices for imported ...

U.S. Trade Deficit The US has been running the significant trade deficit over the last four decades. As a result, the country is the biggest debtor in the world with almost $3 trillion net debt. Obviously, this situation raises concerns among many researchers and policymakers, as they suggest that the long-run trade and current account deficits might make devastating effect on the growth performance. Actually, the issue is quite controversial and debatable: for example, other researches claim, that trade deficit is merely the result of the effective re-allocation of resources in the global economy and there is no consequences, ...

Money and prices in the long run and open economies dictate the financial market. As such, that is why factors such as domestic variables and foreign monetary policies are over-emphasized. Demand for money is thus affected by the domestic variables, which include interest rates, price expectations, and permanent income, among others. As such, this paper explores the financial market to reveal the viable strategies the US can adapt to secure reliable money and prices in an open economy on a long-term basis.

The state of US Financial Market

Over the years, the economy of the US has been in good shape, especially when compared to ...

Long-term influence of monetary policy

Monetary policy can either be contractionary or expansionary, and both policies impact nominal variables differently in the long-run. Price levels A contractionary policy results in a decrease in equity prices because the income stream is discounted at a relatively higher rate. Also, the price levels of equity can drop since high-interest rates and low supply of money lead to reduced demand for equity. In this case, bonds can be an attractive investment since they pay high interests (Meltzer, 1995). Nevertheless, an increase in interest rates does not always result in fall of share prices. People may interpret the high-interest ...

Is Wal-Mart Good for America?

1-How has Wal-Mart changed the power relationship between retailers and manufacturers? Give examples from the documentary. Wal-Mart has had an enormous impact on American producers. In the film Is Wal-Mart Good for America, narrator talks about “the revolution” in the relationship between retailers and manufacturers that took place in the USA when Wal-Mart decided to cooperate with foreign suppliers. In the past manufacturers determined what to produce and at what price to sell their products. However, Wal-Mart that heavily relies on the economies of scale was able to overcome the old “push-production” system and now successfully dictates suppliers and ...

China

1. COUNTRY

We have chosen China as a country for analysis

2. RECOMMENDATION We have decided to convert US dollar to Chinese yuan on May 24, 2016. The total cost in dollars according to this option is calculated further in question 9. 3. CHINESE ECONOMY OVERVIEW China’s role in the international arena has been growing in the recent years. Apart from being the most populous country with over 1.3 billion people and one of the largest countries in the world by territory, it has been experiencing substantial economic development in the past decades (Naughton 3). China is the second largest economy in the world after the USA. ...

Abstract

This study examined the effects of a fixed currency exchange system on China’s economy as well as global growth. The study analyzed the different economic indicators of China and their relation to the fixed currency system. We predicted that this system had an effect on various sectors of the economy and resulted in economic growth which is consistent with recent research on the benefits of a fixed system to the economy. The system has made goods from China cheap hence increased its exports and strengthened its manufacturing industry which has had a positive effect on global economic growth. ...

A trade deficit arises when a country’s imports exceed its exports. There are different schools of thoughts when it comes to establishing a link between rising deficits and unemployment. When a country’s exports are consistently less than its imports, this implies that there is a reduced demand for the goods and services it produces, since its nationals, as well as the rest of the world, are buying products manufactured in other countries. If allowed to continue in the long-term, a persistent deficit will lead to job loss locally, because decreased consumption of products and services means that ...

The Global Economy and International Trade

Introduction At the same time, it would be paramount to draw attention to the importance of international trade concerning the economy of the United States of America. This is due to the facts that the country reveals as a superpower and because the entire amount of both exports and imports results in an honorable second place worldwide (fn. – America waives the first position to China, of course). In advance, I feel an inexorable desire to note that since the time the United States of America had become a state and until nowadays, the country has been altering its directivity ...

Introduction

The exchange rate has become an integral component of modern economics. Its role stems from its far-reaching effects on the economy of a country, investments, the profitability of firms, and personal finances. Countries have become even more interdependent due to the rapid advancement in communication technologies and the expansion of global trade, which have significantly reduced the geographical distance between both individuals and countries. However, since nations use a broad range of domestic currencies with different values, trading partners must, therefore, rely on currency conversion methods to facilitate global transactions. This paper explores the importance of exchange rate and ...

Soergel (2016) reported that U.S. trade gap contracted in March as exports and imports plummeted. As of March 2016, the net trade deficit was at $56.9 billion a lower figure compared to February’s $62.9 billion. Imports fell to $173.6 billion while export to $116.7 billion the least monthly tally since 2011. The smaller gap boosted the GDP of the country. Soergel noted that the international trade nearly came to a halt in February with the Baltic Dry Index falling to an all-time low indicating that few players were actively buying or selling products from the other nations. However, ...

Introduction

It is a cliché to say that the relationship between China and the world has become complex, multidimensional and interdependent. But that does not mean that we fully understand the complexity of the Chinese attitude towards globalization nor its interdependence with the world in general and the Western industrial democracies in particular, with the implications thereof. The thesis that we develop in this article argues that economic interdependence greatly strengthens Chinese authoritarianism in its ability to politically influence the attitude of States and civil liberties in Western democracies, rather than the reverse. It contradicts the usual thesis that Western ...

Introduction

Boeing and Airbus are the two major aircraft manufacturers in the world, with their rivalry starting in the 1990s, and as it intensified, they absorbed other plane making companies or forced them to exit the market. Airbus, being a European consortium of companies headquartered in Toulouse France is the leading airplane manufacturer in Europe while Boeing is an American company which manufactures commercial and military aircraft, satellites, weapon and electronic defense systems among other tasks. On the other hand, COMAC is a Chinese state-owned limited liability company that is mainly the manufacturer of commercial aircraft for China and also ...

Preamble

Addressing the trade balance’s nature, it seems worthwhile noting that its indicator reflects the difference between the state’s exports and imports. Talking more scientifically, it is a pecuniary ratio amid the amount of money received for goods and services exported outward a country and the cash paid for imported goods and services. If exports’ money exceeds the currency accepted as exchange for the imported articles, the circumstance stands for external surplus. Otherwise (if market conditions reveal vice versa), the case is generally called as red ink.

Introduction

In 2015, American economists claimed China to become first-string trade and ...

Thesis statement

United States trade with China has grown significantly since the year 1979. This has led to an increase in both exports to China and imports from China. Although there have been negative consequences on the US economy, trade with China brings more good than harm to both China and the US.

Introduction

The past three decades have seen substantial growth in US-China trade. Since the US and China formally established diplomatic relations in 19179, the total trade has increased from $2 billion to $591 billion in 2014. China has risen to become the second-largest trading partner of the United States. ...

Abstract

The recent activity of PBOC (People’s Bank of China), the devaluation of Yuan with respect to dollar, is often seen as one of their strategic measures to boost the poorly performing export industry of China. Many international exporters from outside of China have been severely hit by this move as the costs of Chinese products declined tremendously. This incident is proves that international markets are always clouded by numerous risk factors such as the one mentioned above. But that should not be deterrent for businesses trying to venture into international trades. In most of these cases, speculative business ...

International trade is defined from various sources as the exchange of goods and services between countries. International trade allows countries to expand their markets for both goods and services that may not otherwise be found domestically. In international trade, the goods and services are called imports and exports and it mainly involves foreign exchange. International trade is either visible (exchange of goods) or invisible (for exchange of services like tourism and electricity).

Imports: these are commodities ...

Question A

According to Gregory Mankiw (2011), trade balance reflects the difference between net worth of exports and imports in a given country. Consequently, positive trade balance suggests in monetary value country exports more than it imports, while negative trading balance (trade deficit) is associated with dominance of imports over exports. Economists argue that trade deficit is not always considered to have a negative impact on the national economy, however it often creates potential risks which may result in harsh economic consequences if they are not addressed properly. For example, if net exports are negative it is assumed that proceedings from exports are ...

The major players in the U.S. automotive industry have had to revisit their policies, strategies and manufacturing practices amid challenges resulting from today’s business environment. Traditionally Klier and Rubenstein (2009) noted that the industry players like Ford and General Motors once produced many of the intermediate parts in-house. Today, the situation is strikingly different as the auto-manufacturers import most of the materials needed from foreign counterparts. This paper explores the causes and effects of the latter state-of-affairs. The U.S. automotive manufacturing industry has resorted to importing most of its materials from foreign manufacturers mainly due to the competition ...

Discuss the measures that a government can take to improve the balance of trade in the short- term

A depreciation in the value of currency exchange of a country should help boost oversees’ demand for U.S. exports because American firms will be able to supply more cheaply internationally (Keeler, 2007). A country can devalue its currency by a large margin in one or two installments in quick successions so that foreigners can find goods and services of a country cheaper to buy and boost exports rapidly.

Another method that a government can use to improve balance of trade over the short term is to reduce demand in the economy thereby reducing consumer spending in the economy. The government can use fiscal ...

The Maastricht Treaty launched the European Monetary Union in the year 1992. The union comprised of two parts, which included the creation of euro the common currency and creation of the European Central Bank, which coordinates all monetary policies in the Eurozone. The treaty also created the rules for countries willing to join the union. The other element of the treaty was the national central banks of the 16 member countries. European Monetary Union creation has led to price stability and proper management of public finances (McKay Volz & Wolfinger 2011).The final phase of the single currency introduction ...

(Name of Author) There has been a lot of controversy surrounding the balance of trade deficit in bilateral trade between the United States and the People’s Republic of China. Many American analysts, including Lou Dobbs, argue have increasingly argued that the trade between the USA and China only serves to benefit China more than the American people. There is consensus that there has been significant growth in trade between two countries. China is currently the third largest trading partner of the United States. China is also the 3rd largest destination for exports from the US. Figures for ...

During the seventeenth and eighteenth century, The Great Britain was trying to invade most lands in East Asia so that they could do trade commodities on their own terms and conditions, and without any barriers imposed by the local authorities. There were a significant amount of commodities found in East Asia that were demanded in Europe. First the British government established their company called ‘East India Company’ with the desire to do trade; however, later on they attempted to invade most parts of the East Asia. Opium Wars were the proof of invasion of China by the Great Britain. The ...

In economics, inflation can be explained as a persistent increase in the general price level of goods and services over a period of time. Inflation results in a reduction in the purchasing power per unit of money which means money losses it’s real value over period of time. The inflation rate is measured by inflation index . Inflation index shows the change in percents of general price index also called consumer price index over the period of time. (Mankiw, 2002).

There are described three types of inflation:

1. Demand-pull inflation which is caused by increases in aggregate demand due to increased private and government spending; 2. Cost-push inflation ...

Introduction:

Over the last decade, 1993-2013, China has become the world’s largest holder of foreign exchange. According to China Business News (28, March 2006), China’s foreign reserves had increased up to $853.7 billion. Foreign exchange reserve accumulation was useful to the country during the process of economic reform. It greatly boosted foreign trade and investments. Macro-econometric data explains the differences in trade performance between China and the developed countries based on comparative and analytic framework. China and India, for instance, adopted different development strategies. Over the last two decades, China has been adopting export-led development strategy that ...

Current Economic State and 2008-2009

It is about six years since the world experienced the worst global financial crisis in the history of the world economy, however, considerable improvement can be seen by looking at economy of various states all over the world (Irwin, 2013). The economy had a continuous increase of risk in all sector following the failure in housing prices and weak monetary policy of key economies of the world. Risky economy resulted to the sudden change in the lending rates and spending by the households. The effect of these was manifested in the sudden but steady decline in the world per capita. ...

- Globalization and burgeoning technology/innovation that shrink product-life-cycles, coupled with global competitor’s quality and price, brings goods to the USA adding to 80-90% mega-competition for most consumer goods sold in USA, compared to <25% in 1950’s. Equally, global companies compete severely and challenge US firms abroad. - The U.S. and Eurozone economies play major roles in the world economy and are crucially important for each other’s prosperity. The two sides combined account for around 40% of world GDP, over 25% of world trade, 60% of world foreign direct investment flows, and 60%-70% of ...

Assignment 1 International Finance

<Title of the academic institution>

Question 1: What factors cause some firms to become more international than others?

While there may be plenty of factors forcing firms to open up to the international flows of money, products and services, they may be narrowed down to several primary stems. It is commonly acknowledged that every firm as a reasonable participant of economic activities is aimed at minimizing production costs and fiscal liabilities and maximizing profits. It would not be an exaggeration to say that due to the increasingly international manner of the contemporary economic system, the barriers and borders are gradually becoming obsolete, therefore making it possible for economic entities to expand their ...

Globalization has been taunted as a positive development due to the increased interconnectivity of many parts of the world. However, like many such developments, there are upsides and downsides to it. One of the major disadvantages of globalization to the American economy in particular is the proliferation of products that have been imported from other countries. This affects the market for American produced products. This paper will make arguments supporting the promotion of buying of products that are made in the United States of America. Many studies have been carried out to investigate the preferences of American consumers and the ...

Abstract

This paper explores the main macroeconomic indicators and gives the overall assessment of U.S. economy. We have overviewed the U.S. GDP growth, the rate of inflation and unemployment rate. We have identified the U.S. economy’s stage of business cycle. Based on the analyzed data, we have suggested the possible fiscal and monetary decisions that can facilitate economic revival. We have examined the main factors that can improve net trade balance. We have prepared the economic forecast for the following year based on the decisions made in terms of fiscal, monetary and trade policies. Keywords: GDP, macroeconomic, inflation, ...

China has proved to be a production hub for many multinationals like General Motors, IBM, Apple and many more. Low manufacturing costs and economies of scale have made it the most suitable production base. Its private consumption figure is 8% in the world but it contributes far more to the goods and services production. Recently people have started doubting the viability of setting up a production headquarter in China and believe that the golden days are over. None of the known economists have openly raised their doubts about the so called “Chinese Boom” coming to an end. The Great Depression that ...

Business between Saudi Arabia and United States

Business between Saudi Arabia and United States

Introduction

Saudi Arabia was instituted in the year 1932 and has the big influence on global political system and economy due to huge oil reserves. Saudi Arabia propounded and strengthened Islamic faith. Hue oil reserves and strategic location make Saudi Arabia very important to United States. Official business relationship between Saudi Arabia and America started in year 1940. The relationship faces several challenges in terms of terrorism and recently on Al-Qaeda. This paper discusses the business relationship between Saudi Arabia and United States.

Discussion

Saudi Arabia plays an important role in managing socio-economic and ...

BUSINESS ECONOMICS: THE UK ECONOMY

- Introduction3 - Reasons for Economic Downturn in 2008/094 a). Financial Crisis4 b). Business Cycle4 c). Government Policy before Crisis5 - Analysis of the Effects of the Downturn6 a). Microeconomic Effects6 1). Effects of Households6 2). Effects on Businesses6 b). Macroeconomic Effects7 1). Effect on Unemployment7 2). Effect on GDP and Inflation7 3). Effect on Share Prices and Company Profits8 - Government Policies Aimed at Recovery8 a). Fiscal Policy8 b). Monetary Policy9 c). Austerity9 - Actions/Steps Taken by the Government9 - Expectations of the Government Actions10 ...

Introduction

Economics is a term which lies in almost every walk of life and it is a term which is quite important from different standpoints. The term of economics has been utilized and discussed entirely through different provisions in total. There is no single definition of the term ‘Economics’ exist in this world, because every author has been discussing the same in a somewhat different manner in total. Adam Smith and Alfred Marshal are known as the founder of Economics (FOE), found that economics is the study of wealth and the concept of the same should have been categorized into different provisions ...

Tax payers

The learning team members had a discussion on The United States deficit surplus and debt. The Government is known to takes in revenue through taxes. The government runs on a budget deficit yearly and surplus has to do in part with how the government policymakers use the funds (Cashell, & Library of Congress 2004). The better option known in tax reduction is surplus tax to be returned to taxpayers.

Future Social Security and Medical Users

There has been an increase in medical spending while health care has maintained its cost in same class. Social Security has role of running a surplus of millions of dollars to date. The social ...

The study of colonial America is the study of themes. These themes could base on ideas, such as the Great Awakening, or they base the issue on great events, such as the prelude to the revolution. One of the most significant themes in America based on the desire for wealth, land, and prosperity. In fact, alongside the principles enshrined in our Constitution designed to protect rights to speech and faith which otherwise intended to protect property, which is what many had come to the New World to obtain. The colonial America depict the various historical events, which affected America ...

[Insert Name] [Insert ]

Does Trade with Low-Wage Countries Cause a Trade Deficit in the High-Wage Country? The United States Business and Industry Council claims in their website americaneconomicalert.org that the US economy is in a manufacturing emergency (USBIC To save American Manufacturing 1). They claim that the reliance on imports from third world countries with lower wages is threatening the survival of the manufacturing sector in the country. This perspective can be assessed using economic analysis. The expenditure approach gives a mathematical formula for measuring the real GDP of an economy. Real GDP is the sum ...

Affiliated Institution

Define the term trade deficit and select the one article that you wish to discuss on the topic trade deficit Trade deficit is used in measuring the balance of trade, the balance of trade is said to be at equilibrium when the imports are equal to the exports, however when there is a negative result, that is the imports are more than the exports then it is termed as a trade deficit (Schultz, 2012). Within the international business cycles trade deficits usually occur but are corrected by market forces and equilibrium is achieved and the market clears. An extended trade ...

Oil and its products comprise some of the key commodities and products for any economy from their crucial role in energy supply. In addition, oil has been a commodity whose sourcing, production as well as marketing has being of great concern to many economic stakeholders as energy is one of the key drivers of economic growth and development. In addition, oil has been at the centre of governments’ policies focus as countries seek to secure supply and enhance production as well as tap the benefits that come with the precious commodity. In that respect, this analysis seeks to establish the ...

What were the cause and effect of the large U.S. trade imbalance during the postwar period? Most of the years after the World War II, United States has experienced the surplus in trade. However the oil price shock that occurred between 1973 and 1974 and 1979 and 1980 together with the global recession, subsequent to the second oil price shock, deteriorated the international trade. During the same time, United State began to experience the shifts in the international competitiveness. By 1970, most of the countries, mostly the freshly industrializing countries, were progressively growing competitive in the international trade. ...

Does Trade with Low-Wage Countries Cause a Trade Deficit in the High-Wage Country?

Since 1992, the trade deficit in U.S. has risen more or less progressively. The trade deficit relative to Gross Domestic Products in the second quarter of 2004 surpassed the 5% for the first time ever. Most economists considered “trade deficits” that were above 4% of (GDP) treacherously high. The fear may be that, unrelenting growth in the U.S. economy’s external imbalance would ultimately spook over-seas financiers (Christian, 2004). China and the U. S. share the most imbalanced bilateral-trade correlation in the world. Every year, the U. S. imports more goods from China compared to its exports to a tune ...

ABSTRACT 3

INTRODUCTION Background 4 Information Sources 4 Limitations 4 ANALYSIS Presidential Election and the Economy 5 CONCLUSION Summary and Interpretation of Findings 12

REFERENCES 13

Abstract This paper presents an analysis of the article entitled The Growth Recession of 2012 and the Presidential Election published by Forbes.com in October 2012. The purpose of the paper is to present a recently published article and provide an analysis in light of the principles and theories of economics. The discussion involves the analysis of a recent article by relating it to the theories and principles of Economics specifically ...

Egypt developed into a world economy during the nineteenth century. This was as a result of the complete transformation of the agricultural sector that saw cotton become Egypt`s main cash crop. Development in agriculture was accompanied by numerous changes ranging from Egypt`s social structure, land tenure institutions to the agricultural practises and techniques employed. This paper seeks to discuss at length the Egyptian agriculture, the importance of agriculture to Egypt and the different changes that has been experienced in the agricultural sector at large. Moreover, it aims at verifying the importance of cotton farming in Egypt and the level ...

Minimum wage can be defined as the lowest daily, hourly, or even monthly payment that employees can legally be given by employers. This is defined as the lowest wage in which employees can sell their labor. It is the statutory remuneration that is fixed by the Agricultural Wages Advisory Board and the General Wages Advisory Board or any other council of any sector which has been established by the ministry of labor. Constitutional minimum wages were suggested in order to control the explosion of different sweat shops and especially in manufacturing industries. Sweat shops were known to employ large ...

I am interested in writing about economic growth. This topic is so timely because the economy of US was reported to grow in the third quarter of this year. The growth in the economy was due to increases in inventories and export, thereby raising the gross domestic product to 2.7% during the third quarter. Economic growth is a very important indicator of the economy as it signifies increase in the productive capacity of the country over time that leads to increases in national output and income. It is the increase in the total output of a country over time and ...

The most recent event in the country that I can think of is the 2012 Presidential Election. What has this to do with the economy?

The most obvious connection between a presidential election and economic activity is that, if the incumbent government is eyeing for a reelection, then pre-election programs include execution of expansionary fiscal policy since such policy (either increase in spending or a tax cut) tend to increase economic growth, reduces unemployment and increases the political support for the politician. I learned that fiscal policy pertains to discretionary changes in government spending and tax collection with the goal of ...

Q.no.1: The financial crisis that hit the United States first and then the world economy starting in fall 2007 meant that the future prospects of many firms looked gloomy at best for some time. Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate. Show your answer using a graph. Answer: A depression is a severe economic downturn that lasts for several years. It is characterized by falling Gross Domestic Product (GDP) and high unemployment rates. What started as a financial crisis in the ...

For this assignment, I gathered and analyzed information from the international financial markets in the period December 19-30, 2011. Based on my analysis, I decided to go short the futures on the Nikkei 225 stock index. Here I offer you my reasoning.

In increasing order of significance, the summarized reasons for my decision are:

the Japanese economy has been in a funk for the past 20 years; the consequences of the March 2011 disasters;

the European sovereign debt crisis and its effects on the global economy;

the Yen reached record highs against major currencies. After the post-war Japanese economic wonder, the Japanese economy has gone nowhere for a period of over 20 years. The graph below, based on OECD and FRED data, shows ...

Throughout the clothes manufacturing industry, a number of factors have fallen into place which has led to incredible changes in free market trade and the international textile market. In order to increase profit margins and stay in business, cost cutting measures, such as outsourcing and the like, have been implemented, making the textile and apparel market an internationally dependent one. Since the 1950s, there have been significant changes made to the market that will be detailed here; what's more, the consequences of these changes will be detailed, in terms of the workers, the industry, profits, and more.

The most major ...

TACKLING UNEMPLOYMENT IN THE US

According to Alan Tonelson of the Bloomberg weekly, the only way to reduce the unemployment rate in the U.S. is by ensuring fair trade internationally and by American’s; corporate, government agencies and the citizens buying American products. In so doing America would be reducing its huge trade deficit that currently sits as $422. 9 billion as of June this year making a significant increase of 3.9% compared to the same period last year. The likelihood of creating employment opportunities in the country largely depends on how international trade between the U.S. and its trade partners will be streamlined (Tonelson, ...

Introduction

The movie I.O.U.S.A brought to the attention of America the consequences of their national debt and the need for the government of the US to show some more financial responsibility. Most of the Americans and their elected officials are aware of the financial challenges facing the US it is upon them to act before the situation worsens. I.O.U.S.A was produced to focus on the solutions to the financial crisis that the nation is facing. It has a discussion panel with professionals from a range of view points spanning across different generations. i. How are consumers' short-term actions creating long-term consequences? ...

INTRODUCTION

Wal-Mart Stores Inc., the world’s largest retailer, is possibly the most controversial business in America. According to Duke University professor Gereffi (2006), Wal-Mart is a model for all businesses in all industries. With over $375,000 billion in sales for its 2008 fiscal year and approximately 1.7 million employees worldwide (of these, 1.3 million are U.S. employees), proves Wal-Mart one of the largest companies in the world. Wal-Mart, based in Bentonville, Arkansas, has capitalized technology and trade agreements (e.g., between the U.S. and China) to move to more global operations in its quest for greater profits. In general, Wal-Mart ...