FOREIGN TRADE POLICY AND THE IMPACT ON AGGREGATE EXPENDITURES AND EQUILIBRIUM :: essays research papers

FOREIGN TRADE POLICY AND THE IMPACT ON AGGREGATE EXPENDITURES AND EQUILIBRIUMThere are two types of aggregate expenditures supreme and InducedAutonomous expenditures are not influenced by unfeigned GDP. Induced expenditures are influenced by real GDP.Actual aggregate expenditure is always equal to real GDP. proportionality expenditure is the level of planned aggregate expenditure that equals real GDP.Net export expenditure reflects the international linkages based directly on service and change flows across borders, and indirectly reflects capital flows into and out of a particular country. U.S. unknown employment and global economic policies have changed dramatically during the past two centuries. Since the commodious Depression and World War II, the country has sought to reduce trade barriers. U.S. trade deficits have grown larger since the 1980s and 1990s as the American appetite for alien goods has outstripped demand for American goods in other countries.The join States has not always been an advocate of free trade. At times throughout history, the country has had a sound impulse toward economic protectionism by using tariffs to limit imports of foreign goods in order to protect American industry.A big factor leading to the U.S. trade deficit was a sharp rise in the value of the dollar in the early to mid 1980s. This made U.S. exports more expensive and foreign imports into the United States cheaper. The dollar appreciated because of the recovery from the global recession of 1981-82, and in huge U.S. federal budget deficits which created a significant demand in the United States for foreign capital. That, in turn, drove up interest rates, and led to the rise of the dollar.Exports are determined by international prices, trade agreements, and the real GDP of foreign countries. tout ensemble things being equal the higher foreign prices, the more liberal trade agreements and the higher the real GDP of foreign countries, the higher the exports become . Exports are autonomous of real GDP. Imports are determined by international prices, trade agreements, and the real domestic GDP. All things being equal the lower foreign prices, the more liberal trade agreements and the higher domestic real GDP, the higher the imports become.According to a recent article in Washington (Reuters), dated November 13, 2004, written by Jonathan Nicholson, a tax aimed at boosting savings, holds promise. This is in response to President Bush and one of his ideas to get the economy moving again. Bush is currently proposing to reform the tax code.