Economic Analysis Assignment - Essay Example

Forecast on interest rates are also an important measure to check the demand of goods in the economy, interest rates are used by the federal government to achieve higher levels of growth and also to check inflation, for this reason therefore when inflation is high in the economy we expect the federal government to raise interest rates, when interest rates are raised the cost of borrowing funds is high and therefore we do not expect the aggregate demand in the economy to rise, for this reason therefore when there is inflation in the economy we expect that firms are already aware of the policy measure to be undertaken by the government, for this reason the firm will not produce the top ten US trade partners include china, Mexico, Canada, Japan, UK, Germany, south Korea, France, Taiwan and Netherlands, the diagram below summarises the import, exports, percentage import, percentage exports of the ten countries to and fro the US: The deficit level of the top 10 countries is not consistent with the level of ranking given, the ranking however is based on total trade with the country, and total trade is achieved by adding up the total exports and total imports of the countries.

The table above shows the percentage imports from the country, the ranking by percentage imports is consistent with the ranking of top ten trading partners. The diagram below summarises the various countries and their ranking regarding deficit levels, positive deficit shows that the US imports more than it imports, negative deficit shows that the US imports are less than exports:Data was retrieved from http://www.census.gov/foreign-trade/statistics/highlights/top/top0709.html#total b. Federal Reserve given the exchange rate of the yen against the dollar we can be in a position to determine the cost of box lunch each first day of the year from January 2000 to date, the exchange rate keeps on fluctuating and as the yen appreciates then the cost of box lunch becomes expensive, however when the yen depreciates the box lunch is much less expensive, below is the exchange rate of the yen against the dollar, we assume that due to the non existence of exchange rate on the first day of the year we assume that previous day exchange rate is the one that is used in the next day.

The table below represents the cost of the lunch box in yen and in dollars, also gives the exchange rate