How does the American and world economy work and need each other?
In: Economics
America makes products that it sells to other countries. If those countries are poor, they can’t buy those products anymore. This hurts the American economy because you no longer have customers for your products, which negatively impacts your economy.
People want and need different things. Those people and those things come from different countries. Because of that, trade between countries brings those needed things to the people and countries that need them in exchange for money between buyers and sellers.
The US, and any country, have demands in order to exists. They have requirements in order to keep existing. This includes providing basic needs like food and shelter, as well more complex needs like entertainment and transportation. Countries produce things for their own people, but if the demand for something in your country is low it might be very expensive to make. Instead we can make a lot of it, build huge factories that speed up production, and then sell it to other nations. In exchange, those other nations let us buy stuff we struggle to make, or to make cheaply. This betters all countries involved. The US Is the richest country so it has a lot of sway in how much they buy and sell things for but they are not unique in how they interact with the world economy.
not any different than any other economy, just a global scale. America both buys AND sells a lot of things to other countries. if those transactions disappear, then both sides have to deal with the consequences.
There are also things like specialization and trade. No supplier (whether that’s a business or country) can be good at making literally everything they need AND also cost effective in doing so. Some countries are better at or more efficient at doing things than others. If you’re really good at making hats and can also make them for cheaper than I can, it makes more sense for me to buy hats from you than try to make them myself. This is mutually beneficial because you make sales and i save money.
or…..you’re good at making hats, but im great at making shoes. so we trade hats for shoes and we both come out better than if we both made our own hats and shoes.
I hate to just post a link but:
[https://stripe.com/resources/more/which-countries-use-the-us-dollar-heres-a-complete-list](https://stripe.com/resources/more/which-countries-use-the-us-dollar-heres-a-complete-list)
This does a pretty good job of explaining everything in an easy to understand way
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