Economics Report: Comparative Analysis of Global Economics

This economics report provides a comparative analysis of the economies of the United States and China, highlighting their strengths, weaknesses, and the impact of the US-China trade war, including the imposition of tariffs. The report also delves into the Euro's existence, its economic and political challenges, and its implications for member countries. Furthermore, it explores the economic theories of John Maynard Keynes and Friedrich August Hayek, contrasting their perspectives on government intervention, market dynamics, and monetary policies during the Great Depression. The report utilizes various sources, including news articles and academic research, to support its findings.

Running head: ECONOMICS
Economics
Name of the student
Name of the university
Author note

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Answer 1
Economy of US and China
Both the markets of USA and China are performing well in the recent years. The
economy of US is a highly developed economy and is the world’s largest economy by
nominal gross domestic product. On the other hand, china is also the world’s second largest
economy in terms of nominal GDP. China is also one of the world’s fastest growing major
economy in the world. China had been one of the few countries to escape from the global
financial crisis. It have experienced only a mild slowdown in the economic activity on the
other hand the America economy was highly hit. There was a credit crisis in USA and they
have also experienced severe recession
Strength and weakness of Chinese economy
One of the biggest strength of china is that its huge population offers a cheap labour
and this acts as a huge potential market for the employment. Another strength of china is the
huge growth of the gross domestic product. The export growth have increased by 25 percent,
the growth rate of gross domestic product was around 7 percent. Favourable government
policies for investment also acts as a strength for china.
One of the weakness of china is that it have restricted itself largely to the domestic
market (Chin ET AL., 2017). Also, the education level of china is not very advanced
compared to the other countries. The biggest weakness of china is that the government is
known to be restrictive since it does not allow social media and have put restrictions on them.

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Strength and weakness of USA
The economy of the United States of America is that it is largest and the most
important market in the world and have highest value of investment in education and R&D.
The highly educated workforce acts as the biggest strength for America (Liu and Li, 2015).
The well established infrastructural facilities including railways and ports also acts as
strength
The low amount of investment into customer oriented services acts as a weakness for
USA. The credit market have turned weak after the attack of the global financial crisis. There
are also large number of number living in poverty. The fiscal deficit and the external debt is
also increasing in the percent years.
US china trade war
Both china and United States and China are engaged in trade war where each of the
country placed tariffs on goods traded between them. The president of USA known to have
complained about the trading practices since 2016 and imposed tariffs on billions of dollars’
worth of Chinese products worth of $250 billion (BBC News. 2019). Beijing also hits back
with tariff of around $110 billion on the US goods resulting in global trade war.
Present situation
Presently, US and china have agreed for establishment of enforcement offices for
monitoring the enforcement of the trade deal that needs to be finalized

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Question 2
Why do euro exist?
Euro was an overarching currency that was used for exchange between countries
within the European Union that was introduced in 1999 (Ahmad ET AL., 2016). Euro also
provides various economic advantages to the European citizens since it makes travel cheap
and easy.
Political and economic problems of euro
Though many European countries have adopted euro, Denmark and United Kingdom
have exempted from using it. Recently during Brexit, Britain left EU which earlier adopted
euro. During the case of inflation in the economy, countries not in the European Union could
reduce their interest rate faster. the single currency made it attractive for the other countries to
do business which will in terms influence trade and investment. The main purpose of euro is
to provide a common currency throughout Europe which also eliminated the exchange rate
risk and the cost of currency conversion within the European Union.
The debt currency in Greece is a perfect example of the economic problem of the
European currency (Seretis and Tsaliki, 2016). Another problem with the euro is that is
cannot instantly adjust the supply and demand balance. The single currency have also lead to
high rate of unemployment and inflation in the economy.
Part 2
John Maynard Keynes and Friedrich August Hayek were the famous economists
during the period of Great Depression. Keynes believed that economic components like
employment and demand can bring happiness in business cycle (Keynes, 2017). On the other

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hand Hayek insisted that imbalance between price and demand for interest rate and plans for
long term productive projects are where the economic action is.
Keynes believe that markets are inherently invisible but the usage of government’s
fiscal policy can moderate the boom and busts in the economy. Hayekian believe that the
government do not have sufficient information for directing the economy and their efforts
will damage their goods. Keynes have suggested that the interaction between the government
and the overall economy moves to the opposite of business cycle. When an economic boom
will create inflation in the economy, the government should cut back its spending which is
termed as fiscal policy. Hayek have called for reform in the monetary policies like
denationalization of money for preventing future monetary shocks.

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Reference list
BBC News. (2019). US-China trade war in 300 words. [online] Available at:
https://www.bbc.com/news/business-45899310 [Accessed 5 May 2019].
Chin, G.T., Pearson, M. and Yong, W. eds., 2017. International Political Economy in China:
The Global Conversation. Routledge.
Liu, S. and Li, Z., 2015. Study on the Outward FDI in the USA of Chinese Enterprises. Open
Journal of Social Sciences, 3(07), p.35.
Keynes, J.M., 2017. Keynes Vs Hayek. Austerity vs Stimulus: The Political Future of
Economic Recovery, p.11.
Ahmad, E., Bordignon, M. and Brosio, G. eds., 2016. Multi-level Finance and the Euro
Crisis: Causes and Effects. Edward Elgar Publishing.
Seretis, S.A. and Tsaliki, P.V., 2016. Absolute advantage and international trade: Evidence
from four Euro-zone economies. Review of Radical Political Economics, 48(3), pp.438-451.