Essay 2

International Trade and Finance
Carla Miner
ECO 372
November 14, 2012
  Neal Johnson, UOPX Online Faculty

  The United States is the world’s third largest exporter, as of September 2012 the country’s exports were worth 187 billion.     The United States main exports include machinery and equipment, industrial supplies, non-auto consumer goods, motor vehicles, and parts, aircraft, and parts, food, feed, and beverages.   The United States exports to almost every country in the world, main export partners include Canada, European Union, China, and Japan (Trading Economics 2012).
  Before any country can trade with another country they must enter into that country’s market and buy currency.   According to "Council For Economic Education" (2012),   “In the same way that supply and demand for products shift to change the prices of those products, the constant shifts in the supply and demand for foreign currency result in changing prices of currency.   As a result, the price of money changes as demand for foreign currencies changes.”   This change in price from one country’s currency to another country’s currency is the foregein exchange rate.   It allows individuals from one country to know how many units of their currency they can exchange for forgein units of currency.
  Consumers use United States currency to buy foreign currency, so if the demand for foregein currency increases the demand for United States currency increases.   If the supply for dollars increases the price of the United States dollar falls, causing the dollar to depreciate (Trading Economics 2012).
  The supply and demand of the United States dollar can affect imports and exports.   When the dollar is more valuable than foreign currencies, the United States has the potential to purchase more with the dollar.   This increases imports and is beneficial for United States importers.   Importers who buy products, such as electronics at lower prices and...