International Trade

Assignment 1: LASA 2: International Trade

Visit the U.S. Government Web site: http://www.export.gov/tradedata/index.asp

1. Go to the Import/Export Data link.
2. Find TradeStats Express.
3. Find National Trade Data.
4. Determine the trade balance between the U.S. and China for the most recent five year period.
5. Illustrate the trend over this period with a graph of the data.

Based on the data provided, create a report in Microsoft Word discussing the trade balance between China and the U.S. for the most recent five year period. In your discussion, include an analysis of the effect of such trade balance on the economies of China and the U.S., both individually and comparatively. Justify your discussion and analysis by using appropriate examples and references.  Include in your report an analysis of the impact on the U.S. economy of the situation where China holds such a large amount of the U.S. debt.

Assignment 2: The Net Exports Effect

The “net exports effect” is the impact on a country’s total spending caused by an inverse relationship between the price level and the net exports of an economy. Using this principle, discuss how the following economic variables change during an economic expansion:

• The balance of payments
• The rate of interest
• The value of the dollar

In your answer, also discuss the case in the context of both a flexible exchange rate and a fixed exchange rate.