Question
1. International trade and globalization link the economies of countries that trade with each other. Explain how the US business cycle can affect the economies
1. International trade and globalization link the economies of countries that trade with each other. Explain how the US business cycle can affect the economies of its major trading partners. Also discuss ways in which changes in its fiscal and monetary policies are felt by trading partners, and especially countries with a fixed exchange rate linked to the US dollar. 2. How are exchange rates determined? Among the economic factors that influence exchange rates between two countries are relative interest rates, relative inflation rates, and relative growth in real GDP. How do each of these factors influence the exchange rate? For example if the United States is growing faster than Canada, what happens to the exchange rate between US and Canadian dollars? If the rate of inflation is higher in the United States than in Canada? Or if Canada increases interest rates relative to US interest rates? 3. https://www.youtube.com/watch?v=kLE4eKBLk8o Talk about the video
4. Do you know anyone who has estimated his or her retirement savings goal in today's dollars? Offer two reasons why many people do not per-form those calculations. Offer two reasons why it would be smart for people to determine a financial target.
What are your thoughts on this comment? "Younger workers today face some serious challenges in deciding where to invest their retirement funds."
Of all the mistakes that people make when planning for retirement, which one might be likely to negatively affect your retirement planning the most? Give reasons why.
5. How did globalization affect your local economy? Did firms benefit by being able to export more? Or was local manufacturing and services negatively impacted?
6. Globalization increased the supply of inexpensive imported goods for US consumers. When globalization was halted, there were shortages of some goods. Overall, do you believe you benefitted or were harmed more from globalization as a consumer, given the lack of domestic production today?
7. China loosely linked its currency to the US dollar. How did this benefit China? Did it benefit the USA? What effect did it have on the balance of trade and payments?
8. Explain what happens to your ability to buy a foreign good when the US dollar gets stronger. What happens to US firms that export as the US dollar gets stronger?
9. A country may tax imports to protect its domestic producers. The result is higher prices for consumers. A benefit is a domestic base of production. Which do you think is better - lower prices on imported goods or higher prices on domestic goods? Why do you think this?
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