Question

Find information on the trade balance for the US and find the comparable measures for the country you have chosen for the past three years. Discuss the trend of the balance of trade for each country. For the currency in each country (the dollar in the US and whatever the currency is called in the country you chose), find the exchange rates for the previous three years. For the US, find the exchange rate with the Euro, the Japanese Yen, and the British Pound. For your selected country, find the exchange rate with the US dollar, the Euro, and the Japanese Yen. Describe the trend of exchange rates for each currency over the three-year period — is the currency appreciating or depreciating against the other currencies? Explain how this pattern of the currency can impact the economy .

Answer 1

Trade balance is the difference between number of goods exported and imported in a country

Country Name	2017	2018	2019
China (US$ bn)	217	103	164
United States (US$ bn)	-550	-628	-616

Thus U.S has a trade deficit as its imports are more than exports. And the deficit was higher in 2018. While it has declined in 2019 because of trade war.

Whereas China has a trade surplus and the surplus lowered drastically in 2018, after which it increased slightly in 2019 because of higher import gains.

Per US$	2017	2018	2019
Euro	0.885	0.847	0.893
Japanese Yen	112.166	110.423	109.01
British Pound	0.777	0.75	0.783

USD has appreciated against the Euro and Pound in 2019 as $1 is worth more in 2019. Whereas the currency has depreciated against the Japanese yen in 2018 and 2019 as one will get less number of yen for 1$. Appreciation of the currency will make imports cheaper as one is able to buy more goods with $1 from Europe and Britain. Whereas depreciation will lead to less number of goods being bought from Japan as $1 value has decreased. Depreciation will increase the earnings sought from exports, while appreciation will increase imports. Thus too much imports will worsen the balance of trade for an economy. Which will lead to decline in employment rate as the country is buying goods from abroad.

Per Yuan	2017	2018	2019
US Dollar	0.15	0.15	0.14
Euro	0.13	0.13	0.13
Japanese Yen	17.26	16.03	15.64

In the case of Chinese Yuan, the value has depreciated slightly for dollar and Yen in 2019, stayed constant for Euro. Depreciation of Chinese currency implies that China will earn more from exports to US and Japan. While appreciation will lead to more imports. Thus the economy will earn from exports and the balance of trade will be in surplus, generating further gains and employment opportunities.