Brazil and U.S. Trade Agreement
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This paper analyzes the issue of an American-Brazilian trade agreement and its impact on U.S. consumers. The paper provides diagrams to illustrate that the U.S and Brazil trade agreement is basically a political alliance, and not an economical one, as it does nothing for the consumer. Instead, the paper shows how this agreement increases anxiety in the market, which deliberately decreases buying capability in anticipation of inflation.
From the Paper:"Consumption function dictates that consumer's ability to consume that is marginal propensity to consume [known as mpc] can only work within the budget of the consumer. At this instance for example the consumption level is at medium, where income is also sufficient for the consumers to buy the kind of products they want because they are produced in the country. As shown by the following graph, budget line IB represents the limits upon which the consumer wants to be. Only a higher level of satisfaction or the desire to achieve higher mpc would motivate the consumer to increase their budget to encompass more capability to the consume. This is shown by IC curve [Indifference Curve]. When the consumer is at IC he is at full satisfaction and is not motivated to increase his budget to buy more. A combination of goods at C could very well provide him for his needs [Varian, 1984]. This is what the U.S. economy was before the talks of Brazil started."
Cite this Analytical Essay:
Brazil and U.S. Trade Agreement (2003, October 07) Retrieved August 18, 2019, from https://www.academon.com/analytical-essay/brazil-and-us-trade-agreement-36327/
"Brazil and U.S. Trade Agreement" 07 October 2003. Web. 18 August. 2019. <https://www.academon.com/analytical-essay/brazil-and-us-trade-agreement-36327/>