INSTRUCTIONS I. YOUR GRADE DEPENDS ON YOUR CONVICTION, CORRECTNESS, ELABORATION AND ELUCIDATION OF YOUR ANSWERS. II. EACH ESSAY COUNTS 20 POINTS. III. YOU SHOULD WRITE ABOUT ONE PAGE SINGLE SPACED PER...

3
Essays
Contents
Volume, direction and composition of trade:    2
Volume of Trade:    3
Composition of trade:    3
Direction of trade:    3
Key reason of international deficits in US:    3
Us dollar maintaining role as a world cu
ency:    3
Impossible Trinity Concept:    4
Fixed Foreign Exchange Rate:    4
Free Capital Movement:    4
Independent Monetary Policy:    4
Evolution of International Monetary System:    4
Judgment on its future:    5
Balance of Payments:    5
Cu
ent Account:    5
Financial Account:    5
Capital Account:    5
References    6
Volume, direction and composition of trade:
If we talk about volume, direction and composition of international trade, they are considered as main profiles through which foreign trade practices of any country can be analyzed ("Analysis of Foreign Trade of a Country: Volume of Trade, Composition and Direction", 2021). Details regarding these three profiles are discussed below:
Volume of Trade:
Volume of trade can be expressed as the size of transactions ca
ied on by a country on international level. The calculation of volume of trade is done only in monetary because there are many transactions daily which done internationally.
Composition of trade:
Composition of trade helps to identify the level of development and the structure of an economy. Composition explains the commodities which are traded where they are only basic commodities or include a large variety of commodities. A developed economy should have a diversified range of commodities that it trades in.
Direction of trade:
Direction of trade implies the direction or the countries which an economy trades, outlets of exports available and the number of countries with which a particular country trades. The more channels of export and import indicate a good level of economic development and vice versa.
Key reason of international deficits in US:
As we know that U.S. is facing trade deficit from many decades, approx 40 years. The main reason behind this trade deficit is that there is not a proper balance between savings of the country and the rates of investment or we can also say that the money spent by US was more than the money made by US. Due to this excess spending US has to suffer cu
ent account deficits ("The U.S. Trade Deficit: How Much Does It Matter?", 2021). The spending of US that is in excess of the money that it makes is for importing the goods and services from other countries. In order to finance this excess spending in foreign goods and services US has to bo
ow money from various foreign lending organizations which ultimately results in increasing the national debt of US. There are many other reasons due to which US has to face trade deficits and is burdened by foreign debt like there is an increase in the spending of government in relations to the budgets sets and this leads to bo
owing the money from other countries, as the economy of US is growing and US is a developed nation with a good standard of living maintained by its citizens, the consumers of US include high income group people which have more money...