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In the United States, if a person is getting paid a certain high wage it is because the economy is structured to sustain that stature of living for the employee. Since the sass’s, the global market has taken on other countries that are able to sustain competitive products for a fraction of the cost compared to the U. S. Exchange rates. The gap between equilibrium price and the world price is what puts the U. S. N a current trade deficit; since the world price is lower and sustaining these low rates the United States has not regained from the deficit for twenty years, and going. Currently the United States is experiencing a recovering recession and most American’s need credit consolidators more than they need home insurance, since most are losing their homes. Social Medias tell Americans to blame the president or the government, but from the result of globalization the country has reached limitations for potential output on the global scale.
It is an inadequate state that the country is in and there is something that has to be altered in order for this issue to be resolved. If the U. S. Was like a factory and the input exceeded the output that would make the product being produced invaluable in the market and the factory would be shut down as a result. (Colander, 2013) The U. S. Has sustained its factory and stayed marketable, but without changes in its growth the factory is at risk. According to David Colander, international competitive forces put a limit on domestic potential output over the years. Colander, 2013) Since we are still a sustaining market and the global pricing is he strain on the price of the dollar in America the globalization has only limited our markets potential, but is still putting a large strain on the population. According to Economics, ninth edition by David Colander, the U. S. Trade deficit has a significant impact on employment??at $30,000 a Job, a $600 billion dollar trade deficit translates into more than 2 million fewer Jobs for the United States. (Colander, 2013) According to the U. S. National Debt Clock, the U.
S. Currently debt and deficit has now been ongoing for several years. (Hall, 2014) If the country mutinous on this path of deficit and defeat, the economy will experience instability in products. Once companies experience instability in products they start losing money. After companies start losing money they start laying off employees. As soon as there are massive layoffs of employees there are large amounts of the population looking for high paying Jobs and the Job market is flushed with too many qualified people to choose from.
There are large amounts of people getting government funding and are finding other means to save money. For example, to save some cash house moms on budget they would resort to low cost items at the grocery store. There are many high valued American products that are sustainable at the grocery store: Pepsi, Lays, Oscar Mayer, but there are many foreign products that would be purchased because of the savings. Those savings have an ironic connection to the unsustainable market and everything along the way.
The connection between the import-led stagnation and the equilibrium price is the answer to renouncing the trade deficit. Since the world price is very low compared to the equilibrium, there has to be a decrease in rice in order to sustain product growth on the global market. In order to reduce prices there is going to have to be a decrease in taxes since it is the taxes and fees that make products expensive for consumers. The outsourcing to other countries for products to reduce prices has Jilted our economy and needs to be adjusted.
Lowering out sourcing and reducing domestic spending over long term would bring imports and exports in equilibrium and eventually would lower equilibrium price while causing the world price to rise. Also, the changes to the equilibrium will bring more sustainable Jobs for Americans and eliminating massive lay-off for companies, but maintaining all those expensive salaries without adjustment would be bankruptcy for a company in a matter of years maybe less.
As a result, companies would have to adjust their salaries to be less in order to sustain full employment. Less money coming into households would sustain lowered domestic spending and help the efforts of the domestic and global equilibrium. (Colander, 2013) Even though the efforts of most Americans is not to lower their income and spending, it would be the eye to clearing up our trade deficit that the market is currently experiencing.
The American people are the key to eliminating our own domestic potential limitations. Limiting spending, lowering wages, and reducing foreign production would be the key to a healthy domestic pricing.