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International Trade And Finance Speech

1255 words - 6 pages

International Trade and Finance Speech
ECO/372
September 23, 2013

International Trade and Finance Speech
According to (Colander, 2010, p. 505) a surplus means when a country “produces more than what it consumes.” “Countries that enjoy a trade surplus have more money flowing in than out. This includes both money for the products the country exports and the money spent by foreign visitors” (Wisegeek, 2013, p. 1). The effect of trade surplus in a nation indicates it has more control over its own currency. In some ways the United States and Japan are major competitors in the market of international trade (Encyclopedia of Nations, 2013). Each, country produces many of the same goods, for ...view middle of the document...

1). Imports increase consumer surplus while decreasing the amount of the seller’s surplus. However, trade still raises the economic health of a nation because the gains of consumer surplus outweigh the losses to the seller’s surplus (Boundless, 2013).
According to (Investopedia, 2013) a macroeconomics analysis of the gross domestic product is often considered an important indicator of the economic performance of a country. A gross domestic product provides information on what it measures. “It measures the market value of the goods and services produced for example, if a new automobile is sold for $20,000 compared to $1,000 for a new television set, the auto will add 20 times as much to GDP as the television set” (Ferrarini & Gwartney, 2009, p. 1). The cost of GDP is calculated using the following formula as indicated by (Colander, 2010, Ch. 8, p. 184).
“GDP=Consumption = Investment + Government Expenditure + Net Export”
Increase in net export is a positive relationship between the gross domestic product and the next export. So when the next export increases, the gross domestic product will also increase through increasing the aggregate demand. The graph below attempts to illustrate the impact of increasing next export in the domestic economy.
Price

AS

AD1

AD

Q1
Q
Real GDP

Decrease in net export reduces the country’s gross domestic product and increases the unemployment rate in the country. However, the impact on university students is the increasing of aggregate demand attracting new investment, and pushes demand for employment in the country. Therefore, the effect of surplus on university students according to (Siegmund, 2009, 9, p. 1) states, “the United States posted a healthy trade surplus of $12.6 billion in the education sector. Despite the effects of the recent worldwide economic slowdown, a modest increase in this vital sector is foreseen.” Below is a graph recording the United States trade in education and the steady increase from 1997 to 2008.

In 2008 Siegmund further highlights that expenditures from “U.S. students studying abroad were about $5.2 billion, which yielded a positive trade balance of about $12.6 billion” (Siegmund, 2009, 9, p. 1). Additional factors, which effect surplus are what is referred to as trade barriers. These are “any of a number of government-placed restrictions on trade between nations” (Wisegeek, 2013, p. 1). These trade barrier are inclusive of tariffs, and quotas according to (Colander, 2010). Quotas are the maximum quantity of goods and services that can be imported or exported in a certain time. This type of barrier is imposed on certain products or services to reduce imports permitting domestic production. This is designed as a protection against foreign competition (Investopedia, 2013). Tariffs differ because it is “a tax imposed on imported goods” (Investopedia, 2013, p....

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