what is the current U.S. trade balance?

QUESTION 11 (1 PSGE)

What is the current U.S. trade balance?

The US recorded a trade deficit of $50.2 billion as of May 2011.

You have just read arguments for and against sustaining a trade deficit—which do you find more persuasive and why?

I find the argument that trade deficits are a sign of a nation’s weakness as more persuasive amongst the arguments against trade deficits. When a nation has trade deficits it shows that it is relying more on products that are made by other nations an indicator that it cannot support domestic production.

On the arguments for trade deficits, I find the argument that trade deficits can be a sign of economic strength more persuasive. Imports are high when a nation is experiencing economic growth. A time when consumers have enough money to buy domestic and foreign products.

Does your answer change depending on the country you think about (i.e. would you give one answer for the United States, another for Japan, and another for Peru?)

The answer to the above question changes depending on nations. For instance, for the developed nation, the trade deficit can be a sign of economic growth. However, for developing nations, trade deficits can be a sign of economic weakness.

What is the relationship between trade deficits and the potential for financial crises?

When a nation has a large trade deficit, foreign investors accumulate large wealth in that nation. For instance if it’s in the US they accumulate dollars. Since the dollars cannot be used in the foreigners’ nations, they are invested in the US by buying stocks, bonds, and other assets in the US. If these investors decide to sell their assets at the same time, then the US dollar value would fall significantly within a very short time.

How can trade deficits have a positive economic effect in a country?

Trade deficits enable consumers to access the required products at a cheaper price. This leads to more savings which when invested properly impact the economy positively.

Again, does a state’s ability to sustain trade deficits depend on the size and/or strength of its economy?

The ability to sustain trade deficits depend on the economic strength of a nation. Nations with weak economies may have challenges sustaining trade deficits potential in creating the economic crisis.

QUESTION 12 (1 PAGE)

How has the American economy changed over the past 20 years?

The American economy has greatly changed over the past 20 years. The trend has changed from agricultural production to manufacturing to high technology and service sector.

Who benefits and who loses from this transition?

American workers have suffered greatly with the transition especially those with a low degree of skills. This is because they tend to work in industries. Those with higher-tech manufacturing skills have benefited greatly since the economy has shifted to the service sector.

What role has the U.S. government played in trying to smooth this transition for American workers?

As part of smoothening the transition for American workers, the US government has sponsored programs that are designed to ensure that displaced workers acquire required skills in the service sector.

What additional measures do you think the government could implement to help workers?

The US government should involve all other stakeholders including the private sector to ensure that displaced workers are helped in acquiring new skills to survive in the service sector.

 What can be done at the federal, state, and local levels?

At federal, and state levels governments should ensure that programs are funded that equip displaced workers as well as the young ones with skills required in the high tech and service sector. At local levels, governments should ensure that the funded programs are being implemented effectively and that proper skills are being passed to the workers as well as to the students.

What changes have you seen in your schools and universities that reflect the changes that are taking place in the economy?

There are some changes in the school that reflect economic changes. Previously focus was on agricultural production and on manufacturing skills. This is however shifting to high tech and service sector skills. The syllabus is focussing more on high tech skills.

 What sorts of classes are offered today that would not have been a decade ago?

Classes on computer programs are offered today and it would close to impossible to have them in the 1990s.

 What sorts of companies are hiring students today?

Currently students are hired by high tech and service companies such as those that deal with information technology.

Is this different from before?

This is different from before. Students used to be hired by manufacturing companies.