Free Trade & Foriegn Exchange

User Generated

DhrraT6

Economics

Question Description

What r freely floating exchange rates all about, and how do they work? What r some reasons for our large trade deficit? How can USA reduce the large trade deficit?Under what conditions would you advocate for trade restrictions? ORIGINAL ANSWERS!

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Explanation & Answer

Freely floating exchange rates are the exchange rates in which the value of the currency is determined by the free market . Countries that have a highly probability of constant change within their chosen market in which their supply and demand effects the value of currency within one's country. Decreasing the value of the US currency would lead to a trade deficit reduction, weak economies reduce importing/exporting ventures, thus, reduces the trade deficit, and increase product competitiveness. Trade is vital to our survivability, personally and economically, thus, restricting trades would severely hinder the already established recovery process. Advocating for restriction would most likely happen if traded countries were considered as a threat the US territories, violation of a trade agreement,  our are actively participating in an activity in which the US prohibats are additional factors of consideration.

UXCW (6237)
UT Austin

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