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International Trade Essay

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Below is an essay on "International Trade" from Anti Essays, your source for research papers, essays, and term paper examples.

International trade is the exchange of goods and services with other countries.   It can represent a substantial share of the GDP for the US.   Greater international trade helps the US economy as long as trade balances are kept down.   Two tools the government can use to help manage the economy are fiscal policy and monetary policy.   The fiscal policy is changes in government spending, borrowing, or taxes to either speed up or slow down the economy.   The monetary policy is the Fed’s control over the money supply.   The exchange rate determines how much the US dollar is worth, which in turn affects the amount of imports and exports.   Protectionism is a policy limiting trade between nations.

Balance of trade is defined as the difference between the monetary value of exports and imports over a period of time.   A trade surplus happens when you export more than you import and a trade deficit happens when you import more than you export.   Since the 1970’s the US has had a trade deficit.   As of November 06, 2006, the US had a deficit of 70.1 billion for September, this down from 74.9 billion in August.   The US had a surplus of services, 5.8 billion in September which is down from 5.9 billion in August.   Patterns indicate that the deficit increases faster during economic expansion and increases slower during economic contractions.   This deficit can be blamed on several factors which include:   continued economic growth in the US, rising oil prices, continued increase of imported products, continued demand for US investment asset, and continued dependency on foreign countries for food, raw materials, and natural resources.   Some people believe that a trade deficit is not good for the country’s economy.   During a recession, countries usually export more which creates more jobs and increases demand.   During an expansion, countries usually import more which creates price competition and keeps inflation down.   Therefore, a trade deficit would be good for the economy during an...

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