What is foreign trade policy?

Answer 1

Foreign Trade Policy is about a country's decision on which other countries they will do business with. In the case of the U.S. we have NAFTA (North American Free Trade Agreement). Congress decides what countries we "trade" with, although the forethought of how much or little was apparently not addressed. This is why we have a huge deficit with China. They import more of their products to us than we export to them. So, they make more money on what they send to the U.S. but they do not buy an equal amount of what we send to them. This is where regulation should be interjected. President Clinton signed NAFTA into law with the idea it would be good for the U.S. to send products abroad, keeping the American worker on the job. However it backfired because of the cheap imports from countries like China, our workers were laid-off and companies went out of business because Americans were attracted to the low prices of goods coming from other countries. Wal-Mart is the best example of how China is crippling our economic situation. Wal-Mart is the largest importer of foreign products and is the largest customer to China. Look at 10 items in that store and 9, if not all 10 will have been made in China. As long as we buy Chinese goods, our workers will continue to suffer job losses. China's Foreign Trade Policy seems to be to sell a certain product under its cost, until and American company making the same product goes out of business due to retail price. Then, China raises the price of that same product knowing it will still sell, because the American company that used to make that product is no longer in business. This is an ingenious way to take over American businesses. Presidential candidate Barack Obama has promised to regulate NAFTA so that it is fair. He states he will forbid the outsourcing of automobiles to any other country and to only trade with countries that import and export equally. If this becomes the case, then for every dollar Wal-Mart sends to China, then China will have to buy the same amount of dollars of our goods. Foreign Trade Policy does not in itself mean it has to be fair. It simply means two or more countries agree to trade goods from each country to the other.

Answer 2

The original idea of multiplier was given by R. F. Kahn, this multiplier was Employment Multiplier. The Employment Multiplier

Mcom-glob

2

studies the effect of changes in employment on changes in income

as per which the changes in income happens to be greater than the

initial change in employment. It works through employment

multiplier.

Algebraically,

ΔY = ke · ΔE

ΔY stands for change in income. Ke stands for Employment

Multiplier ΔE stands for initial change in Employment.

Lord J. M. Keynes borrowed the idea of his Investment

Multiplier from R. F. Kahn‟s Employment Multiplier. The Post-

Keynesian economists extended the Keyne‟s multiplier meant for

closed economy to foreign trade multiplier meant for an open

economy.

The Concept of foreign trade multiplier was given by Mr.

Leighton.

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