Factors that affect the country’s economy include: the inflation rate. If a given state has a relatively high rate of inflation, local households and corporations are probably in buying a substantial number of imports. The state’s firms are also more likely in experiencing some difficulty in exporting. On the other hand, a fall in inflation will lead to increasing in the nation’s international competitiveness and is probably to increase the exports, reducing the imports. The country’s exchange rate will also be another effect to the country’s economy. A fall in a nation’s exchange rate is likely to lower export expenses and raise import costs. It will be more probable in increasing the value of the exports and reduce the amount that has to be spent on imports. Gross Domestic Product is another factor that is likely to affect the country’s economy. Companies are more likely to buy additional raw materials and capital goods, and some of are liable to be from abroad. Homes will tend to buy more products, and some of these are liable to be imported. An increase in local demand can tend to encourage some local companies to change from the foreign to the domestic market. If this has to occur, exports will tend to fall (Mankiw, 2014).
The transaction between Bill and Japan Software Company is an outward operation where the resources of the United States are taken to another country through the importation of the software. The process…
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