Answer to Question 1
In the United States, international trade (imports and exports) makes up a lower percentage of GDP than in many other countries. As a percentage of GDP, U.S. imports and exports each make up less than 20 percent of U.S. GDP, whereas in some countries, such as Belgium and the Netherlands, imports and exports make up over half of GDP, and in larger European nations such as France, Italy, Germany, and the United Kingdom, imports and exports make up between 25 and 50 percent of GDP.
Answer to Question 2
Three factors change the supply of U.S. dollars: U.S. demand for imports, the interest rate in the United States and other countries, and the expected future exchange rate. If U.S. demand for imports increases, the supply of U.S. dollars increases. If the interest rate in the United States falls relative to interest rates in other countries, the supply of U.S. dollars increases. And if the expected future exchange rate falls, the supply of U.S. dollars increases.
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