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Fiscal Policy Paper

In: Business and Management

Submitted By diana1205
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Italian Clothing Company
The deficit, surplus, and debt of the United States affects an Italian Clothing Company because; when it comes down to the United States deficit, it would cause the market to be over-run by foreign products. The rate in which a country is exporting is not at the level with it’s’ exports, a surplus would lead to more importation by the Italian Clothing Company and debt, it would cause the imports to be reduced (because many business partner would be hesitant to do business with the importer. Gross Domestic Product (GDP)

Effects on Italian Clothing
Budget Deficit Expansionary polices, such as those incorporated into an economy during a recession, have positive effects for imports. Increasing the money supply will increase an American consumer’s option to purchase more foreign goods such as Italian clothing (Colander, 2010).

Budget Surplus Contractionary policies, such as those that may occur in an economy operating at its productive capacity will have a negative effect on the purchase or Italian clothing. Levels of trade with foreign countries will decrease from the peak productive period.

Debt Initiatives to pay-down the United States debt could have a negative effect on the economy, thus reducing the demand for Italian clothing. However, if efforts to lower the debt are successful there will be less tax burden on consumers in the future leading to more opportunities for foreign trade.

An Italian Clothing Company (Importing)

When the United States has a deficit, it has a positive effect on importers from different countries. For instance, when an Italian clothing company is trying to import its clothing goods to the United Stated but the US does not have the funds to pay for the products, the result may be a deficit to the clothing company. Instead, the company may trade the clothing with other US products or free company

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