International_Trade_Simulation_and_Report

International Trade Simulation and Report International trade is exchanging goods and services with each other. Some countries have certain resources that are not available in the other, in order to meet the needs of both countries, they trade. There are advantages and limitations involved with trading. Benefits arise for both countries but there are also limitations that are put into place to control the quantity and quality of international trade. Certain factors also affect international trade such as foreign exchange rates and government policies. Organizations such as the World Trade Organization (WTO) overseas international trade among its members, ensures that rules and agreements are followed. List One Advantage and One Limitation of International Trade as Identified in the Simulation There are many advantages to international trade and few limitations. A couple of the advantages are a new pool of consumer products to your economy and new markets that manufacturers can target as potential consumers. The last advantages to international trade that can be beneficial are new areas of investment. Creating these jobs would have a huge impact on our economy but more directly the immediate economy the company is based in. Overall it would expand our tax base and benefit the whole system. The limitations come more on the importing side of things. There is no economy that wants to import more than they export creating a deficit. So a country will want to impose tariffs and import quotas to make sure that the domestic producers do not lose their market share at home. If they do that at least their small loss at home is outweighed by the gains received on the export side of things. These limitations are very important to the overall health of any economy whether it is and established strong economy or a young new and hopeful economy. Describe the Influences Affecting Foreign Exchange Rates There are many factors that can affect foreign exchange rates. Foreign exchange rates are determined by supply and demand for currencies. Supply and demand is influenced by factors in the economy, foreign trade, international capital, and trade flows. An important factor that can affect foreign exchange is the well being of the global economy and the activities surrounding international investors. Capitol flows are of great importance in foreign exchange rates, and should be monitored closely. Currencies are very sensitive to changes in interest rates and inflation. Currency with higher interest rates will attract more international investors; therefore, the country will sell more goods and services producing strong investment for the global economy. Debate the Issues Surrounding International Trade There are several issues surrounding international trade. The first one would be the lack of trusts within global trade, restrictions on foreign investments/purchases and investors not following the rules and regulations by The World Trade Organization (WTO). In addition, a sudden shift in recession, high taxes, and financial crisis can also be a downfall for trade. For instance; with the recession, an investor would want to purchase goods and services at a lower price, if we have the same product at a higher price, they may purchase goods and services from another source where the cost is less expensive. Another issue surrounding international trade is child labor. Children are being used to produce products such as clothing in countries such as Taiwan. The Effects of Government Policy on Economic Behavior Government policies can have serious effects on economic behavior. These economic behaviors can be both positive and negative. Policies have changed in the United States due to the financial crisis and recent recession. This has reflected consumer purchases in many ways. Many consumers have scaled back on purchases that are not a necessity and spend more time searching for bargain prices. Taxes have also played a large impact on the economy in our country. These policies that are created to find ways to spend consumer tax dollars that will impact the economy in a positive way. For example; when the former President, George Walker Bush, Jr. our 43rd president used the American tax dollars of $17.5 billion dollars to save the "big three" (GM, Ford, and Chrysler) to bail them out of debt. President Bush’s intensions were to help boost the economy by saving the business and thousands of jobs. What is the WTO' According to the website of The World Trade Organization (WTO), deals with the rules of trade between trade of nations at a global level. The organization is located in Switzerland and it is composed of 153 members. All the members are able to participate in all councils and committees except the Appellate Body, in Dispute settlements and plurilateral committees. The goal of the World Trade Organizations is to help out producers of goods and services, exports, and imports conduct their business. The World Trade Organization monitors trade agreements, helps investors with trade providing technical assistance and training for other countries. The WTO also holds documentation which includes agreements and negotiated documents signed by the bulk of the world trade nations. These documents hold legal ground rules and policies for trade. (World Trade Organization, n.d.) The world is made in a way that not one country has everything it needs, because of this reason we trade. International trade can provide for new jobs because producers get new markets which mean more production. Limitations such as tariffs and quotas are put into place to prevent more imports than exports. Government policies affect economic behavior because the policies that are put into place affect jobs, spending and buying and other areas of the economy. WTO which is made up of different countries helps to ensure that trading between countries follows rules, agreements and settle disputes. International trading is needed for all countries which are where income comes from for many and there are many factors involved to ensure that is done smoothly.