However, there are advantages and disadvantages of international trade in the simulation that cause the world’s economy to fluctuate and leave certain countries astray. One of the advantages to international trade that I found for countries was the monetary gains and having the ability to keep their own markets honest causing the local producers to improve its goods for the reason citizens have more choices available to them. The disadvantages of international trade have to deal with countries of higher power that try to take advantage of smaller countries by swindling their government into unorthodox trading during a crisis within those countries. Another disadvantage is the possibility of local producers becoming weak, causing the unemployment rate to rise because local producers are unable to compete with international
Monetary policies influence and are influenced by international developments, including exchange rates, and based on these market conditions the U.S. government can make strategic changes to these policies to maintain the country’s economic stability (full employment, stable growth and price stability). For example if Federal Reserve actions raised U.S. interest rates, the foreign exchange value of the dollar generally would rise. An increase in the foreign exchange value of the dollar, in turn, would raise the price in foreign currency of U.S. goods traded on world markets and lower the dollar price of goods imported into the United States (Federal Reserve, 2005). By restraining exports and boosting imports, these developments could lower output and price levels in the U.S. economy and control or lower
One thing we can be sure of is that a business cycle affects different sectors of our community in different ways. Gross domestic product is a great measure of an economies growth. The chair of the Federal Reserve uses information gathered from GDP to assist with making necessary adjustments to keep a balance between inflation and unemployment.
Therefore, understanding exactly how monetary policies will affect the economy is extremely important. Monetary policies generally will raise or lower interest rates, which will ultimately affect individuals and business demand for goods and services. Unfortunately, many individuals do not understand the entire concept surrounding the Federal Reserve real interest rate. For example, any magnitude of decreasing the real rates will lower the cost of borrowing; this will increase investment spending, and influence individuals to buy durable goods. These items may consist of automotive, recreational vehicle, homes, and higher educational opportunities.
Introduction Foreign aid programmes have been criticized for profiting the donor country over the recipient country. While there are positive effects of aid programs, there exists other negativity to aid; this type of aid is always tied to a donor countries interests and stakes in the recipient country. Receiving aid may have some negative side effects on the economic and political development of a country. This work will look deeply into the activities of the UN, IMF and the World Bank in donations and fund raiser for the third world countries and the effectiveness of the funds. Also, mention will be made of the positive as well as negative effects of accompanying policies or terms backing the donations using Nigeria and The United States as a case study with little reference to some other developing countries.
This action then helps to create business opportunities, employments, and demands thus resulting in reversion of the initial imbalance (www.en.wikipedia.org/wiki/Keynesian_economics). However, the investment of the government causes a deficit. Government funding source is through borrowing from the economy (i.e. government bonds) and it’s spending exceeds the amount of tax income received (www.en.wikipedia.org/wiki/Keynesian_economics). Friedrich Hayek Hayek recognized connections between three theories thus influencing his perspective of the economy.
The more common and economically orientated explanation for country’s differing attitudes towards international trade is that certain countries gain or loose from trade in certain international markets. Most gains and losses of countries in international trade can be explained by looking at the differing factor endowments of countries. The basic principle of factor endowments in relation to international trade is that a country or group within a country that is trading a resource that is locally abundant to them in relation to the international market will gain from international trade as they do not have the burden of scarcity that other countries will have in relation to them. (Frieden, M. and Lake, D. 2000 p.318) This allows them essentially to behave as an economy of scale within that international market and therefore gain like any other economy of scale might. The inverse is true for countries or groups within countries that are trading a resource that is locally scarce to them in relation to the international market.
(Gordon, 2006) One must avoid viewing this question bluntly as we must delve into all the elements involved. What the sanctions achieve depend on the objectives and their resultant success. Henceforth, I will be discussing what economic sanctions achieve, politically, socially, economically and independently. Economic sanctions involve ‘restrictions upon international trade and finance that one country imposes on another for political reasons.’(Investorwords, no date) There are many types of economic sanction used, most notably comprehensive and targeted smart sanctions. The success of the sanctions depends on a number of factors.
The reason for this is because the commerce clause regulates commerce and trade in the United States. This deeply affects the financial stability of any unit or organization setting out to make a difference within the community. The commerce clause regulates whether or not they get the government funding they need to carry out the program and do with it what is intended. If government regulations are not met then federal funding for programs like the needle exchange program will not be supplied and could jeopardize entire safety organizations that set out for a greater cause. I believe, needle exchange programs inconsequentially reduce the HIV and AIDS epidemic in the country and also , right here in D.C.
Appreciation in domestic currency for exporters implies that their currency is too strong relative to a foreign currency; hence this will make their exports too expensive. They could possibly lose out on comparative advantage to another country with the same product as they produce and