Macro-Economic Effects Of Nafta

Macroeconomic models can be used to show the development of North America since NAFTA was put into effect. GDP has risen 39.3%, 40.3% and 24.1% in the United States, Canada and Mexico respectively. Trade between all three nations has increased from $297 billion to $1.14 trillion. With trade increasing, jobs have increased as well, as 14 million American jobs have been due to trade with Canada and Mexico. As employment has been increased, the frequency of the business cycle has decreased because of the rise in wages and increased spending. Increased spending causes more demand for goods and services and is the reason why the aggregate demand curve has been shifted outward and the aggregate supply curve has shifted downward. This is due to trade …show more content…
GDP has risen 39.3%, 40.3% and 24.1% in the US, Canada, and Mexico respectively. (See Appendix 1) The growth of economies has also escalated with the Canadian economy being expanded on average of 4.1 percent, the US 3.8 percent, and Mexico 3.5 percent. Mexico’s economy has benefited the most from NAFTA as their GDP had quadrupled; over 875 billion. Mexico’s and Canada’s FDI stock has risen to $100 billion and $368 billion respectively. The US economy has also benefited from NAFTA as there has been $80 million of added growth into the …show more content…
Trade has been quadrupled, from $297 billion to $1.14 trillion. With trade increasing, employment has also drastically inclined. Canada’s workforce has gone up from 14.7 million to almost 16 million. In the US, NAFTA has created over 5 million new jobs, and employment has raised over 24 percent. The creation of new jobs had directly caused 14 million American jobs to be highly reliant on trade with Canada and Mexico. (See Appendix 2 & 3). With the creation of several jobs due to NAFTA; the rate of unemployment has been decreased, which limits any stages of a downfall within an