• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Trade between the US and China - International IA Commentary

Extracts from this document...

Introduction

´╗┐Internal Assessment International Economics Word count: 750 Title: U.S. Helps Keep China Exports Flowing Source: Forbes http://www.forbes.com/sites/kenrapoza/2012/11/12/u-s-helps-keep-china-exports-flowing/ This article discusses the impact that trade between the U.S. and China have had on their respective economies. International trade involves the buying and selling of goods between countries. It plays an important role in economic activities and performance all over the world, because there are many benefits to trade. If a country doesn?t trade with others, it has to produce all the goods and services that it needs by itself. Trade between countries allows them to focus their scarce resources on producing that which it is most efficient at producing. A greater overall quantity can then be produced, as scarce resources won?t be wasted on producing some goods inefficiently. This specialization is possible because of the differences in quantities and qualities of each country?s factors of production, known as factor endowments. ...read more.

Middle

As trade enables a country to import different goods from various countries, it is beneficial to consumers because they are given more choice and variety. An increase in competition due to foreign firms forces domestic firms to become more efficient, as failure to do so means selling at higher prices than imported products and the likelihood of eventually going out of business. Increased efficiency in production would result in lower costs for consumers, which is another benefit of trade for consumers. The large amount of trade between the U.S. and China makes the two countries interdependent on each other, as the U.S. needs Chinese imports in order to maintain its high consumption levels and China needs the U.S. in order to keep earning from export revenues. The strong international trade links between these two countries reduce the possibility of war or other hostilities occurring between them. ...read more.

Conclusion

Appreciation and depreciation results from changes in demand or supply for the currency. A downside of this system is that the government has no control whatsoever over the currency value. In the case of extensive borrowing being made over long periods of time, the risk of defaulting on loans would make the U.S. Dollar unattractive to other countries. The subsequent decrease in demand would cause the value of the U.S. Dollar to plummet rapidly. This in turn might bring about cost-push or demand-pull inflation. In addition, because the value of the curency decreases, the value of whatever national debt is already present will increase. In conclusion, international trade has many benefits, as shown by the relationship discussed in the article ? the U.S. is able to consume at a level greater than what it would be capable of consuming at if no trade were possible, and China earns money from its export revenues. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our International Baccalaureate Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related International Baccalaureate Economics essays

  1. Unemployment IA

    The cause of unemployment falling could be linked to the season. During the Christmas season, the demand for normal and luxury goods are high, this means that the demand for labour would also increase because of the sudden change in consumption of goods.

  2. Economics HL - IA

    The worst case scenario, would be that several large cities like London and Miami, would be flooded, destroying economically prosperous areas. In any case, the effects of global warming will be devastating and will affect everybody. So in fact, when a consumer purchases a certain good, which production emits CO2,

  1. Free essay

    IB Economics IA - Commentary 3 (Trade Slump - China)

    However, this solution is a possibility, it is uncertain if the falling rates of employment and factory closure rates will recover in China. This is because the Chinese economy exclusively produces to export products with which only a tiny

  2. Economics IA Commentary - Market Failure. Household energy bills will increase by 50 ...

    In a natural carbon cycle, carbon dioxide is re-absorbed by plants and trees but currently, the burning rate is faster than the absorption rate. Global warming is the direct negative consequence and the government has to invest in new research technologies to avert further crises.

  1. World Economics assignment. The core economic issues that are focused on in this ...

    On September of 2010, Chinese government enforce new import duties ranging from 50.3 to 105.4 percent on US chicken lasting for five years, since a investigation found that US chicken was being sold at low prices a process called "dumping"(6).

  2. Economics IA Commentary - Protectionism. Title of Extract: China Expands Export Quotas with ...

    "(China will) greatly increase rare earth taxes and refine its pricing mechanism to reduce the excessive profits in the rare earth mining industry," the State Council said. China will also raise the threshold for companies applying for export quotas, though it didn't say whether this will reduce the number of qualified exporters.

  1. IB Economics IA Commentary. Title of Extract: Economys gains fail to lower jobless ...

    Even though the economy began recovering due to optimistic predictions, the upturn in economic climate likely caused employers to invest in their businesses through, "ordering more computers and appliances," rather than hiring additional workers. Since more spending resulted from recovery, the economy saw an increase in gross domestic product (GDP),

  2. Hotel prices during London Olympics 2012 - Microeconomics IA Commentary

    Secondly, there is a lack of substitutes available for hotel rooms in London. A substitute good is one which can replace another. Because the Olympic Games are taking place in London alone for a specific time period, potential spectators will have no choice but to pay for hotel rooms in

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work