The Effects Of Exchange Rate Regimes On Different Economic Outcomes

1473 Words Dec 2nd, 2015 null Page
A vast empirical literature in international finance investigates the effects of exchange rate regimes on different economic outcomes. For example, several studies have analyzed the effect of exchange rate variability on bilateral trade, foreign direct investment, and relative prices.Unions have the ability to restrict the supply of labor to a job, which can increase wages for some workers.Even though to acknowledge predatory foreign trade practices undermining U.S.industry , people should manage the economic system better because tax system have unnecessarily raised domestic business cost and the fundamental cause of the present crisis . However, unions can also lower wages. For example, work stoppages and strikes supported by unions can slow down economic growth, lowering real wages.This argument follows a simple causal chain: unequal growth concentrates wealth in the hands of a tiny slice of consumers who can only spend so much money. In turn, the vast majority of earners is left with little extra cash for goods and services. Resulting weak demand undermines growth. Low growth makes everyone poorer than they otherwise might be, including those who own the means of production. Inequality produces other bad economic outcomes, too, such as the underutilization of the nation 's human capital, inadequate public investment in both human and physical capital, and social ills that are costly to address, diverting away resources from investment.
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