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Can I get your help please? I started on trade deficits;

Describe how trade deficits or sur

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Can I get your help please? I started on trade deficits;

Describe how trade deficits or surpluses can influence the growth of productivity and GDP.

but not sure about it and need 2 bullets covered.

  • 1) Discuss the importance of the market for loanable funds and the market for foreign-currency exchange to the achievement of the strategic plan.
  • 2) Recommend, based on your above findings, whether the strategic plan can be achieved and provide support.   
  • original please and thank you  

Running head: Money and the Prices in the Long Run and Open Economies


1 Money and the Prices in the Long Run and Open Economies


Tracy Smith




University of Phoenix


SAM PIRNAZAR Running head: Money and the Prices in the Long Run and Open Economies




Money and the Prices in the Long Run and Open Economies


Gross Domestic product or GDP as it is referred to is a measure of the final economic


activity, and over the years it has seen changes. These changes include how the economy is


growing, it?s spending habits as well as inflation. To better understand GDP and its history we


have to look at the market value and then add all of the market products into a single measure as


it relates to what consumers are willing to pay for food, housing, healthcare and so on. Over the


past 5 years the nation has seen this increase and this paper will touch on the topic.


There has been an increase in the economic status of the United States in the form of


growth at a 2.9% rate in the third quarter of the year 2016 which is an increase from the previous


quarters of the same year. This can be used to predict an increasing Gross Domestic Product of


the nation in the next years as it can be translated to be as a result of increasing positive


contributions from imports, exports, individual and federal government consumption


expenditures as well as the private inventory spending. It has been the strongest and most


remarkable growth rate to be recorded in the nation after many years of stagnant GDP rates. The


economy of the country seems to be back on track according to the rise in consumer confidence


in retail sales and in the economic state (Trading Economics, 2016). There is an increase in the


unemployment rates according to the weak job creation in the nation. The economy of the nation


has recently been considered to be at or near full employment and this expected to slow down the


hiring rates to a certain degree. This will lead to more Americans falling out of the workforce in


the next years.


When it comes to government policy it can actually influence economic growth, the


Federal Reserve is a central bank that is responsible for regulating the quantity of currency Running head: Money and the Prices in the Long Run and Open Economies




within the United States (Mankiw, 2015). When too much money is printed then the higher the


consumer cost and that will not stimulate the economy. The government is also open to


international trade, these trades yield benefits and allows people to produce so that a boundless


assortment of goods can be consumed by the consumer worldwide. Imports and exports provide


growth in the economy by demanding labor and increasing spending.


Supply and demand determines the price of a product the same way the supply and


demand of money determines its value. When prices are deemed to be to high people will


typically keep their money in their wallets and not spend it. The monetary policy can influence


the long run behavior of price levels by leveling the average of prices in the economy (Mankiw,


2015) so this averages buying and spending. Inflation means that there is an increase in prices


and this is because there has been an increase in the amount of money has superseded the


productivity within the economy. Why prices increase is a cause for debate and perhaps an


increase in productivity can balance the increase in inflation, Central Banks (Federal Reserve)


maintains the monetary stability within the country and they have the ability to increase or


decrease rates and that has a direct effect on the consumer who will spend or borrow money. And


?as inflation rears its ugly head, the first task of the central bank should be to keep it under


control? (Jun 2008) there are no easy answers to this in the long run yet the Central Bank is


expected to solve the problem of inflation.


Trade deficits and surplus can influence the growth of productivity and GDP in many


ways as trade deficits take place when our country imports more than it exports products.


International trade has become important to America as there has been an increase in trade since


the 1950?s and this is in part because transportation has been improved ships can carry more than


before. Jets can now haul long distance and air transportation is cheaper, items that were Running head: Money and the Prices in the Long Run and Open Economies




perishable and produced locally like fruits and vegetables can now reach its destination fresh.


Products that could not be purchased out of season are now available for consumption.


Telecommunications has also played a part in being able to conduct business overseas and the


publics needs for foreign goods as well as domestic affects GDP overall. Running head: Money and the Prices in the Long Run and Open Economies


5 Reference


Trading Economics (2016). United States GDP Growth Rate. Trading Economics.


Retrieved on 10 November 2016 from


Mankiw, N.G. (2015). Principles of Macroeconomics (7th ed.). Stamford, CT: Cengage




Central banks cannot do miracles - there are no simple solutions to curb rising inflation, yet


central banks will be expected to find them as political fallout mounts. (2008). The


Banker, Retrieved from


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