ECO/372 Week 5

Topics: International trade, United States dollar, Purchasing power parity Pages: 3 (769 words) Published: February 24, 2014


The current state of the US macroeconomy is not as strong as it has been in the past. The cost of living is high, imports are high, and the overall economy is suffering. Businesses are suffering because it is cheaper to import goods than it is to produce them in the US. With this in effect, the GDP is suffering as well. Even with the tariffs and quotas that the government has put on these items coming into the country, it is still cheaper to purchase from overseas. The macroeconomy of the US is suffering as a whole.

When there is a surplus of imports coming into the US, the manufacturing companies and the economy of the US suffers. Most of the time, it is cheaper to get things from other countries than it is to produce them in the US. The manufacturers of the same products in the US cannot produce them for the same price, therefore their business goes down and they begin losing money. These businesses cannot sustain if they are losing money and business. These imports cause there to be a multitude of businesses going under.

Take the iron and steel market for example. Instead of purchasing iron and steel from the US economy, companies are purchasing the iron and steel from other countries. This is causing the iron and steel companies in the US to go out of business due to lack of business and lack of customers purchasing from them. The surplus of iron and steel imports is causing there to be cheaper iron and steel being purchased from overseas instead of being purchased from US companies.

International trade causes the GDP to go down because there is a lot more items coming into the country than being produced within the country. The GDP is the amount of goods and services that a country produces in a year. When the country is involved with international trading, the country is becoming reliant on other countries to meet its needs instead of being more self sufficient.

International trade also causes the domestic markets to become less than...

References: Colander, D. C. (2010). Macroeconomics (8th ed.). Boston, MA: McGraw-Hill/Irwin.
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