AN ECONOMIST IS SITTING IN THE OVAL OFFICE OF THE WHITE HOUSE, ACROSS THE DESK FROM THE PRRESIDENT OF THE UNITED STATES.THE PRESIDENT ASKS, ''HOWDOES THE UNEMPLOYMENT RATE LOOK FOR THE NEXT...

AN ECONOMIST IS SITTING IN THE OVAL OFFICE OF THE WHITE HOUSE, ACROSS THE DESK FROM THE PRRESIDENT OF THE UNITED STATES.THE PRESIDENT ASKS, ''HOW

DOES THE UNEMPLOYMENT RATE LOOK FOR THE NEXT QUARTER?" THE ECONOMIST ANSWERS ,"ITS NOT GOOD.I DONT THINK REAL GDP IS GOING TO BE AS HIGH AS WE INITALLY THOUGHT.THE PROBLEM SEEMS TO BE FOREIGN INCOME-ITS JUST NOT GROWING AT THE RATE WE THOUGHT IT WAS GOING TO GROW."   HOW CAN FOREIGN INCOME AFFECT THE U.S. UNEMPLOYMENT?

Asked on by ug

1 Answer | Add Yours

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

I am assuming that by "foreign income" you mean the income of people in foreign countries.  Here's how that works:

Many of the things the US produces for export are high cost items.  We are talking here about things like Microsoft Office, for example.  Because of this, US exporters need people in other countries to get richer so they can afford our products.

So, if income does not grow in other countries, they are able to demand fewer American goods.  When this happens, American companies (that rely on exports) might have to lay people off or forego hiring new people.  Either way, it won't help employment.

We’ve answered 318,911 questions. We can answer yours, too.

Ask a question