International Trade and Finance
Understanding the U.S. macroeconomy consists of understanding how various factors such as prices, consumer income, unemployment, interest rates, importing or exporting just to name a few are interrelated impact the overall health of the economy of the U.S.
To begin let’s consider some of the overall repercussions of what happens when there is a surplus of imports brought into the U.S. First off a surplus of imports means there is an abundance of products brought into the U.S. from other countries that begin to pile up in warehouses in large numbers because no one is purchasing those products. More specifically the imported vehicles such as Toyota and Nissan; at the end of the current year (2012) these companies start advertising bigger than normal discounts on the remaining inventory of the current year. These companies then hope to sell their remaining inventory to make room for next year’s models (2013) to have available for selling. Looking at this situation from the beginning of the year we have to figure out how this surplus accumulated. Currently, in the U.S. the unemployment rate is 8.1% (Bureau of Labor and Statistics, 2012) which means there are a lot of homes that do not have that much money coming in. According to the text Macroeconomics, wages and salaries make up the majority of income in American homes (Colander, 2010). Given this many Americans do not have as much money to purchase “extra” needs such as newer expensive cars. This in turn creates a surplus for the imported vehicles, thus causing the car dealers to sell their inventory at lower prices without making huge profits as they had originally forecasted.
Next I would like to talk about the effects of international trade to GDP, domestic markets and university students. All three of these categories are indirectly related to one another but have rippling effects when something changes with the other. According to the text Macroeconomics, the U.S. has...
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