Assignment on Macroeconomics Solved

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Added on 2021-02-22

Assignment on Macroeconomics Solved

Added on 2021-02-22

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Table of ContentsPART A...........................................................................................................................................3Introduction:.................................................................................................................................3PART B............................................................................................................................................3Objectives / intentions of the USA:.............................................................................................3China’s response:.........................................................................................................................5PART C ..........................................................................................................................................6Impact on Australia:.....................................................................................................................6PART D...........................................................................................................................................6Conclusion:..................................................................................................................................6PART E & F.....................................................................................................................................7REFERENCES............................................................................................................................7

PART AIntroduction:Term trade war relates to economical conflicts arising from excessive protectionismpolicies in which states reactions to trade obstacles generated by other party increase or generatetariffs or any other trade restrictions one against other. Enhanced security leads outputcompositions of both countries to shift toward more their place of self-sufficiency. In this contextcurrently China and US is involved is involved in trade war with each other (Tahir, Ghazali andAgil, 2017). Trump initiated new tariffs in respect to China's goods like pork and steel with aim toacceleration in prices. Which implies that Chinese goods' prices are high thus ultimately it lead todecline in demand. So individuals will prefer local goods that are cheaper and easily available.Trump has imposed approx 25% tariffs on Chinese technology and engineering products such asmachines, aircraft parts, auto-mobiles, semiconductor device and other ancillary electronicscomponents of approx $50billion worth. Due to this trade war in China, economic growth of several industries like technologicalsector has been fallen. While US's top most companies in China is facing decline in revenue andprofits which ultimately affected US's economy. In Australia nominal exports to China has beenincreased and also dependency of US on Australian market is increasing. PART BObjectives / intentions of the USA:Factors, either aggregate demand or aggregate supply factors, which US actions areintended to affect:1.Decrease in demand of Chinese Goods.2.Increase in supply and demand of America made products.Decrease in demand of Chinese Goods: On the of the main intention of US actions of increasetariffs and trade restrictions on china is to reduce dependency of consumers and economy of USon Chinese goods. Due to cheaper price of Chinese goods trend of purchasing these goods isincreasing which also affects trade and business of US's small and medium size manufacturerand traders. Due to this factor US's rational GDP achieved a short term growth but in long run itmay decline due to global inflation resulted from trade war. Also unemployment level is

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Assignment on Macroeconomics Solved