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Most Misunderstood Indicators Of The US Economy

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Balance of Trade
Balance of trade is said to be a part of a lager economic unit, the balance of payments (the total sum of all economic transactions between one country and its trading partners) that includes capital movements, freight and insurance charges, loan repayment and other payments. The balance of trade is the difference in value over a period of time between a country’s exports and imports of goods and services. It is said that if a country exports exceed its imports there is a favorable balance of trade also known as trade surplus. Conversely if the imports exceed the exports there is an unfavorable balance of trade or a trade deficit.
As the graph in the article shows when adjusted for inflation (a collective increase in the supply of money, income or in prices) the deficit fell to $56.2 billion in July from $59 billion the previous month.

One of the most misunderstood indicators of the U.S economy is the balance of trade. For example some of the society believe that trade deficit is a bad thing. However, whether it is a bad thing or not, depends on the business cycle and economy. When in recession countries tend to export more which leads to more job places and demand. However, during a strong expansion countries tend to import more, which is providing price competitions that …show more content…

Аs a result, the demаnd for the U.S. dоllar has remаined quite strоng despite cоnstаnt deficit. Surplus cоuntries like Chinа which dо nоt utilize a flоаting currency regime, but rаther keep a fixed pegged exchаnge rate versus the dоllаr, benefit by keeping their currency artificiаlly high. Furthermore a constant trade deficit can often have unfavorable effect on the interest rates of a country. A downward pressure of a currency devalues it making the prices of goods and services entitle in that currency more expensive, in other words it can lead to

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