4.1.2 - international trade and business growth

Question 1

what is international trade?

Answer 1

the exchange of goods and services between countries.

Question 2

fill in the blank:
__________ is the term for the ability to produce more of a good or service than competitors with the same amount of resources.

Answer 2

absolute advantage

Question 3

what is the main benefit of comparative advantage in international trade?

Answer 3

it allows countries to specialise in the production of goods they can produce most efficiently, leading to increased overall economic welfare.

Question 4

what is foreign direct investment?

Answer 4

direct investment into a country to become a MNC.

Question 5

what does the term ‘trade deficit’ refer to?

Answer 5

a situation where a country’s imports exceeds its exports.

Question 6

true or false:
free trade agreements are designed to reduce or eliminate trade barriers between countries.

Answer 6

true

Question 7

what are the reasons for FDI?

Answer 7

• access to local resources.
• investment in expanding industry and fast-growing, profitable businesses.
• access to infrastructure and complementary industries.
• access to foreign brands.
• access to local knowledge and skills.

Question 8

fill in the blank:
__________ refers to the financial gain achieved when a business expands its operations into international markets.

Answer 8

globalisation

Question 9

multiple choice:
which of the following factors can influence business growth in international trade?
A) Market size
B) Economic stability
C) Exchange rates
D) All of the above

Answer 9

D) All of the above

Question 10

what is comparative advantage?

Answer 10

a country’s ability to specialise in the production of certain goods and trade them with other nations, rather than producing multiple products themselves.

Question 11

how can competitive advantage be gained through international trade?

Answer 11

adding value where other businesses cannot such as using local resources, or using specific knowledge and skills of production techniques.

Question 12

what is importing?

Answer 12

goods/services entering the country from foreign countries.
(may be raw materials/resale items etc).

Question 13

what is exporting?

Answer 13

selling products/services direct to foreign customers.

Question 14

what are the risks of trading internationally?

Answer 14

fluctuations in the exchange rate, influencing costs and demand from
foreign buyers.

Question 15

what is an agent?

Answer 15

a business with expertise in the local market that will deal with administration and potentially negotiations with local businesses.