Question

Is trade Good or Bad for the US? When a country trades, are there going to be Winners and Losers? Can the US be the winner for all transactions? Why? How?

Are the Federal Reserve and the President/Congress (Fiscal Policy makers) complements to each other or in competition with each other? Or Both? What is the Goal of the Fed and the goal for the President/Congress.

Answer 1

ANSWER-1)

International Trade has two aspects - brings revenue to the country but also poses a threat for many industries. This is applicable to US also. A country can gain from international trade if it exports goods for which it is a low opportunity cost producer. A nation that has a lower opportunity cost of producing a good has a comparative advantage. Specialization and trade along the lines of comparative advantage permits the countries to consume more than if they were to produce just for themselves. Thus according to international trade theory, a country can gain by the import of goods that they can be obtain more economically from foreign producers. Hence U.S. can be winner if it specializes in producing those things it does best (produces at a low cost). Thus, from the perspective of U.S., the gains are straightforward as the country get more access abroad to sell it's competitive farm products, manufactured items and services.

Along with higher competition, another threat posed by globalization is global market uncertainty. The rising complexity and demand uncertainty in the market, such uncertainty has caused difficulties in organisations planning processes and decision making. Due to rapid technological changes and a increasing number of companies now participating in the global marketplace, forecasting demands and/or competitors’ responses has become more difficult. This has enabled consumers to shift between producers, thus making demand become less predictable and uncertain. Thus it does not guarantee US be the winner for all transactions. To summarize, while opportunities can arise from globalization, competition and uncertainty are unavoidable.