Global economics Research Paper Example | Topics and Well Written Essays - 500 words

Global economics - Research Paper Example Company obtains specialized services at low cost, which gives a competitive edge, and sufficient time to focus on the core business. If the money supply is greater than money demand, interest rate will decline and cause the increase in borrowing and spending by corporate and consumers. In this case demand will rise above the GDP rate and cause inflation. Increase in exports and decline in imports will result in boosting the value of GDP. Low value of currency together with lower interest rates will enhance consumer spending and thus lead to economic growth (Jacob, 2013). The depreciation of yen relative to the US currency has led to make the goods more affordable for US. With the low value of yen, Japan has produced goods and services at cost effective prices. Low prices have grasped the attention of most of the buyers in US, which results in increased production, in Japan. As a result, Japan has increased its exports and thus employment opportunities in the country. For instance, a low valued yen drives to decline the prices for Nissan car, hence attracting more American buyers than GM cars. Consequently, more Nissan cars are being produced, thus increasing the employment level in Japan and lowering employment in US (Ito, 1996). Valuation of the currency leads to lower the prices of import goods resulting in boosting the imports of the country. However, the products manufactured in US will become costly for foreign buyers, hence the exports will decrease. This trade deficit will cause to decrease the net exports of the country and contract the GDP (McConnell et al., 2010). The strong valuation of the currency will result in increasing the interest rates, and hence domestic as well as international investors will be more willing to investment in businesses. Businesses in the country will tend to grow more, leading to additional production activities and; therefore, increase income levels. Due