World Economy

The world economy can have a big impact on the U.S.—and vice-versa. Learn how the global economy works and how events in distant countries may affect you and your finances.

Frequently Asked Questions

  • How much is the world economy worth?

    There are over 7 billion people in the world across more than 200 countries, territories, and regional associations. One way to measure the world economy is to look at the gross domestic product (GDP). The International Monetary Fund measures GDP for the world as a whole. As of April 2021, the world’s GDP was almost $94 trillion (in current, unadjusted prices).

  • What is the largest market in the world economy?

    When measuring world economies by gross domestic product (GDP) in current, unadjusted prices, the U.S. is the largest market in the world economy. However, if you considered purchasing power parity (PPP), China would be seen as the world’s largest economy.

  • How does the world economy work?

    The world economy works through a series of economic transactions between countries. This includes international trade, currency exchange, international investing, immigration, and more. There are several agencies and organizations that help to run the world economy, including the International Monetary Fund (IMF), the World Bank, the United Nations, NATO, and more.

  • How much does the U.S. contribute to the world economy?

    The U.S. economy contributes trillions of dollars to the world’s gross domestic product (GDP). As of April 2021, the U.S. contributed more than $22 trillion to the world’s GDP. The U.S. is a leader in international trade and investment, which has a direct impact on the global economy. If the U.S. sees economic growth, the world economy will too.

  • What economic indicators are used to measure the global economy?

     The global economy can be measured by looking at gross domestic product (GDP), consumer spending, consumption, international trade and investment, money supply, national budgets and debt, and more. These economic indicators are looked at on the individual level for each country, territory, and region, and together as a whole.

Key Terms

Explore World Economy

China cargo trade
It's Good That China's Growth Is Slowing. Really.
A customer purchases goods at a supermarket in Huaibei, Anhui Province of China.
Why China Is the World's Largest Economy
U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau at the 2018 G7 Summit
What Happens When the World's 7 Top Leaders Meet
Russian Oil Tanks
Russia's Mixed Economy and How Pipeline Politics Holds the EU Hostage
Brexit
What Was Brexit, and How Did It Impact the UK, EU, and the US?
German chancellor Angela Merkel
Eurozone Debt Crisis
Deforestation
How Deforestation Costs You and Steps You Can Take Today
How to Measure GDP by country: official exchange rate, purchasing power parity, GDP per capita
3 Ways to Compare GDP Between Countries
Sheikh and European Businessmen
3 Types of Free Trade Agreements and How They Work
Chinese worker counting American currency
How China Influences the U.S. Dollar
Text reads: "The greek debt crisis explained: the greek debt crisis is the dangerous amount of sovereign debt greece owed the EU between 2008 and 2018. In 2010, greece said it might default on its debt, which would threaten the viability of the eurozone. To avoid this, the EU lent greece enough to continue making payments. Germany and its bankers were the biggest lenders, and championed austerity measures including: improving how greece handled public finances; modernizing how greece determined their financial stats and reporting; reforming greece's pension system. Results are mixed—2017: greece ran a budget surplus of 0.8%; economy grew 1.4%; unemployment sat at 22%; one third of greece's population lived below the poverty line; debt-GDP ratio=182%"
Understand the Greek Debt Crisis in 5 Minutes
yuan
China's Plan to Replace the U.S. Dollar With the Yuan
gas shortage sign
The Truth About the 1973 Arab Oil Crisis
Text reads: "facts about India's economy: india has a mixed economy; half of the workers rely on agriculture; the cost of living is lower than in the U.S.; the indian middle class is bigger than the U.S. middle class; it's an attractive country for outsourcing, such as call centers; bollywood contributes billions to india's GDP"
Bollywood Is More Popular Than Hollywood: India's Opportunities
Icelandic volcano eruption
How a Volcanic Eruption Helped Iceland Recover
A woman uses the euro to purchase coffee
What Is the Euro?
IMF Director Christine LaGarde and German Chancellor Angela Merkel
3 Ways the IMF Protects the Global Economy
Woman at the gas station refueling car
Oil Price History Over the Decades
Brazil
How to Ruin an Emerging Market Success Story
Man walking in front of the World Bank Group building in Washington
Some Say This Bank Secretly Controls the World
How the Iran Nuclear Deal Affects You
Yen
How Does the Yen Carry Trade Affect You?
Plastic bottles and polystyrene pollution floating in the water
The Rising Costs of Pollution and What Can Be Done About It
Ship crossing through Panama Canal
How the Panama Canal Lowers Food Costs and Creates U.S. Jobs
student in science lab
What Is Educational Equity and Why Does It Matter?
Trash, flotsam, and jetsom befoul a small body of water.
Economic Impact of Water Pollution
Chinese President Xi Jinping Must Reform China's Economy
China's Economic Reform
Temple of Poseidon, Sounion, Greece
A Brief History of the European Debt Crisis
What to Know About Trump's Trade Wars: Trump's trade wars were part of his strategy to create jobs and lower U.S. trade deficit. The trade wars started a global tariff on steel, a tariff on European cars, and tariffs on Chinese imports. These tariffs imposed by the U.S. caused global stock markets to fall. In retaliation, other countries formed trade agreements while excluding the United States. Domestically, Trump's trade wars caused job loss and prevented innovation. In the long term, trade wars hinder both American and international economic growth
Why Trade Wars Are Bad and Nobody Wins
what to know about exchange rates
How Do Currency Exchange Rates Work?
Breaking Down the Symbols on the U.S Dollar
The Secret Symbols on the Back of the Dollar
things NAFTA does: grants the most-favored nation status to all co-signers, eliminates tariffs on imports and exports between the three countries, all NAFTA countries must respect patents trademarks and copyrights, established procedures to resolve trade disputes, and according to NAFTA expoerters must get certificates of origin to waive tariffs
What Is the North American Free Trade Agreement (NAFTA)?
Two factory workers manufacturing a car
What Are Tariffs?
An infographic of Trade Protectionism with an image of a cargo ship with an American flag and the headline “Trade Protectionism and Its Methods” and four separate methods described. “1. Smoot-Hawley Tariff of 1930. It was designed to protect from agricultural imports from Europe. 2. When the government subsidizes local industries, That allows producers to lower the price of local goods and services. 3. Impose quotas on imported goods. No matter how low a foreign country sets the price through subsidies, it can’t ship more goods. 4. Deliberate attempt by a country to lower its currency value. This would make its exports cheaper and more competitive.”
What Is Trade Protectionism?
Image shows two women standing beside a tall chart. There is money falling from the sky. The first woman is wearing an old-fashioned frock with a large hat and feathers, as well as a corset. The other woman is wearing pinks lacks, a turtleneck, a denim blazer, and large modern earrings. Text reads: "The value of U.S. currency over the years: 1913 = $100 1920 = $197 1930 = $175 1940 = $142 1950 = $240 1960 = $299 1970 = $386 1980 = $794 1990 = $1,300 2000 = $1,722 2010 = $2,211 2018 = $2,529"
Why the Dollar Is Worth So Much Less Than It Used to Be
The History of NAFTA and Its Purpose
Dollar sign in oil
Will the Petrodollar Collapse?
how does nato work? It offers protection of freedom and stability for members and their regions; NATO targets include weapons of mass destruction, terrorism, and cyber-attacks; NATO protection does not extend to civil wars or internal coups; When one NATO nation is attacked, all NATO nations will retaliate; NATO is funded by its members, with the U.S. contributing roughly 75% of NATO's budget.
What Is NATO?
Men eating in a soup kitchen during the US Great Depression
Those Who Don't Learn From Smoot-Hawley Are Doomed to Repeat It
Farmer loading community supported agriculture boxes from work shed into box truck for delivery
What Is the Current US Trade Deficit?
Dollar Bill Detail
The Decline of the Dollar vs. Collapse and How to Protect Yourself
Foreign Exchange Markets
The Market That Dwarfs the Stock Market
what to know about the us dollar as the global currency
Why the US Dollar Is the Global Currency
yuan dollar conversion
How a Tiny Change in the Yuan Can Panic Investors
Pros and Cons of Free Trade Agreements
dollar value in foreign currency
What Affects the U.S. Dollar Rate?
U.S. imports and exports for 2019 totaled $5.6 trillion, with $3.1 trillion in imports and $2.5 trillion in exports
US Imports and Exports: Components and Statistics
pros & cons of international trade. Pros: spurs economic growth, facilitates competitive advantages, and provides domestic companies experience in foreign markets. Cons: leads to job outsourcing and fewer dmoestic roles, causes other countries to lose agricultural base, and undercuts the prices of local farmers
International Trade: Pros, Cons, and Effect on the Economy
Title reads: "3 ways to measure the value of a dollar: 1) exchange rates 2) the demand for treasury notes 3) the foreign exchange reserves" Image shows a small bill being equivalent to 6 foreign coins, and then shows a visual implying that when the demand of large bills goes up and down, so does the demand for small bills. The last image is three administrative buildings from various foreign countries next to a stack of dollar bills.
Who Decides How Much Money Is Worth
Dollar sword and yen sword clashing in a currency war
Why Global Currency Wars Aren't as Dangerous as They Sound
current account
What Is the Current Account?
WTO protester
How the WTO Keeps Your Prices Low
Indonesian farmers protesting the WTO
The Real Reason Why the Doha Round of Trade Talks Failed
A cup of coffee on a pile of coffee beans
6 Pros and 6 Cons of NAFTA
Auto assembly line, Mexico City, Mexico
What You Should Know About Outsourcing Jobs
Image shows what impacts the strength of the American dollar: When the Fed raises interest rates, the dollar's value gets stronger. If the euro weakens, the dollar strengthens. The large U.S. debt-to-gross-domestic product ratio can reduce the dollar rate
3 Reasons Why the Dollar Is So Strong Right Now
A customs inspector standing and reviewing a tack of containers
What Was the GATT?
The Apple logo is accounted for in the capital accounts.
How Trademarks, Copyrights, and Drilling Rights Are Added to GDP
Image shows a folder open on the presidential desk. On the inside of the folder it reads: "The new changes to NAFTA." Inside the folder is a document that reads: "NAFTA: Features new auto manufacturing regulation; opens canada's dairy market to U.S. farmers; regulates mexican trucks crossing the U.S. border; offers more protection for patents and trademarks; reduces competition for U.S. companies selling products in canada; Restricts companies for file for chapter 11"
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WTO Bali Agreement
3 Reasons Why WTO Membership Is So Important
 
 
 
 

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