Presentation: International Trade Theory

For this activity, you will select one of the four module objectives from the Module 8 Overview and Objectives page to address and prepare as a presentation. Provide examples based on external research. Provide at least two references in the current APA format. What real-world applications can your chosen objective be tied to? You will deliver your presentation in class. It should be 7-10 pages, maximum of 5 minutes in length. Here are your required slides: Title Slide Introductory Slide Content Slide Summary/Conclusion Slide Reference Slide Here are 4 options Here we are kicking off the summit session #8. Only one more to go! In this session, we will tackle the international trade theory and exchange rate systems. As you probably already know, international trade theory is defined as the exchange of goods between two parties that reside in different countries. The U.S. economy relies on and is dependent on foreign trade. Foreign trade allows consumers to purchase goods at lower prices and/or goods that aren’t produced in the U.S. Now, you might be wondering whether the U.S. and consumers benefit from trade. The answer is yes. Let me tell you why. When consumers increase their demand for imported goods, the government increases the demand for those same imported goods which increases retail sales. Which, in turn, increases the country’s real gross domestic product (GDP). Ok, that’s a bit about international trade. Let’s shift our focus to trade restrictions and their effectiveness. Foreign exchange rates and the difference between fixed and flexible exchange rate systems. First, let’s discuss trade restrictions and their effectiveness. Trade restrictions come in the form of tariffs and quotas. Tariffs are taxes imposed on imported goods and quotas limit the number of goods that the U.S. imports. Trade restrictions are in place to protect domestic producers and employment as well as infant industries. You might be wondering why, if the U.S. has trade restrictions, so many job opportunities are sent abroad to foreign workers? They do so for many reasons that might include government policies, regulations, and the well-being and safety of domestic residents in the U.S. Now, let’s talk a little about exchange rates and exchange rate systems. Exchange rates differ throughout the world. When a country’s currency is depreciated, it creates an increase in demand for imported goods from other countries. If a country’s currency is strong, this will lead to a decrease in demand for imported goods from foreign countries. A fixed exchange rate system is typically pegged against the U.S. dollar. A fixed exchange rate system can be manipulated by a country’s government. The advantage of a country that uses a fixed exchange rate is that a country will have certainty when they purchase goods at a global level. A flexible or floating exchange rate system cannot be influenced by the country’s government. At a global level, a country that uses a fixed (floating) exchange rate system must take the price based on supply and demand. At a global level, for a country that uses a fixed (floating) exchange rate system, there is no certainty with the country’s currency.

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