Question

1.) Discuss the globalization of the U.S. economy.

2.) Explain the role of price as a free market regulator.

3.) Discuss the impact of GATS, TRIMS, AND TRIPS on global trade.

Answer 1

1.

USA has been the pioneer nation in promoting globalization in different parts of the world. It makes USA to first initiate and prove that globalization helps the economy. It is exemplified by the US economy that not only imports goods and services from the rest of the world, but also exports significant part of the GDP to the other countries.. US exports to the rest of the world is over 12% of the US GDP that shows the international relations developed by the USA, promoting globalization of US economy itself. The globalization has also created competition from those nations who produce goods and services at low cost, such as India and China in Asia, Mexico in North American and Brazil in South America. It has made US economy to move upward of the value chain top continue it exports as well as producing more of technology driven goods that is the competitive advantage of the US economy. Further, US economy has formed different free trade alliances with other nations and most notably is NAFTA. It also also globalized the US economy and trade barriers are almost eliminated.  Hence, a globalization of US economy takes place.

2.

When there is a free market, then it is the demand and supply forces that decide the price and quantity of the goods in the market to establish an equilibrium. When price is higher than the equilibrium price, then surplus is created with downward pressure upon the price to move towards the equilibrium. When price is lower than the equilibrium price, then shortage is created with upward pressure upon the price to move towards the equilibrium. It makes price to be a regulator of the market to help achieve equilibrium and maintain stability in the market. It is referred as price working as a regulator in the free market.

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