Ch:7 International Trade Flashcards
define domestic trade
The trade that takes place between the individuals living in the same country is called domestic or national or internal Trade.
What is meant by international Trade?
International trade is the trade that takes place between the inhabitants of two countries.
Differentiate between national (internal) and international (external) Trade?
The trade that takes place between the individuals living in the same country is called national or internal trade.
Conversely, The trade that takes place among the individuals living in different countries of the world is called international or external trade.
What is meant by balance of trade?
The systematic record of the money value of Invisible imports and visible exports of a country in one year is called balance of trade.
What is meant by balance of payments?
The systematic record of visible and invisible exports and imports of a country in one year is called the balance of payments.
Define balance of payments in the words of Prof Kindle Berger?
It is the systematic record of all economic transactions of a country with the rest of the world.
Define balance of payments in the words of Prof Samuelson?
International balance of payments is all that transaction for which either foreign exchange is spent or received.
What is an International monetary fund?
International Monetary Fund: An international organization has been
established to maintain the balance of payments of different countries which is called international monetary funds.
What is the objective of the establishment of international monetary fund?
The objective of establishment of international monetary fund is to maintain the balance of payments of its member countries. This organization provides foreign exchange to improve the balance of payments of its members.
Write six advantages of international trade?
Following are six advantages of international trade:
Acquisition of foreign goods.
Availability of goods in case of shortage.
Export of surplus production.
It causes international peace.
Removal of monopolies.
Optimum use of productive resources.
Write a few disadvantages of international trade?
Following are a few disadvantages of international trade:
Dependence on production of limited goods.
Dependence on other countries.
International effects of inflation and deflation on the economy.
Loss to backward countries.
Monopoly of developed countries on international market.
Supply of goods injurious to health.
Who did present classical theory of international trade?
Classical theory of international trade was presented by Prof Adam Smith and Ricardo.
Who did present Absolute advantage theory of international trade?
Ans: Prof Adam Smith presented the absolute advantage theory of international trade.
Who did present the comparative cost (comparative advantage) theory of
international trade?
Prof Ricardo presented comparative cost or comparative advantage theory of
international trade.
Write the points of difference between domestic trade and international
trade?
Following are points of difference between domestic trade and international trade:
In mobility of labor and capital
Difference in currencies.
Difference in trade restrictions.
Difference in Government’s facilities.
Difference in trade agreements.
Difference in trade polices.
Write items of balance of payments?
There are two types of items of balance of payments:
1-Visible imports and exports.
2-Invisible items.
Which are invisible items of balance of payments?
1-Rewards of the services of foreign companies.
2-Expenditure on education in foreign countries.
3-Expenditure on Treatment in foreign countries.
4-Expenditure on Tourism.
5-Expenditure on political, cultural and trade delegates.
6-Expenditure on political issues.
7-Expenditure on foreign loans.
8-Financial aid.
9-Foreign investment and profit on it.
10- Man power earning.
Name the classical theories of international trade?
1-Absolute advantage theory of Adam Smith.
2-Comparative cost theory of Ricardo.
What is meant by surplus balance of trade?
.
If a country exports visible goods having more value than that of visible goods imported by it, the balance of trade is said to be surplus or favourable
What is meant by deficit or unfavourable balance of trade?
If the value of visible exports of a country is less than the value of its visible imports then its balance of trade will be deficit or unfavorable.
What is meant by balanced balance of trade?
If the value of visible exports of a country is equal to the value of its visible imports, then it is called balanced balance of trade.
What is meant by surplus or favourable balance of payments?
If a country exports its visible and invisible goods of more value than the value of its imports of visible and invisible goods, then its balance of payments will be surplus or favourable.
What is meant by deficit or unfavourable balance of payments!
If a country exports its visible and invisible goods of less value than the value of its imports of visible and invisible goods then, its balance of payments will be deficits or unfavourable.
How can trade position of a country be examined either by taking into
account balance of trade or balance of payments?
To examine the trade position of a country, instead of its balance of trade, its balance of payments is taken into account.
Write four causes of deficit balance of payments of a country?
Following are four causes of deficit balance payments:
(1)Decrease in exports.
(2)Increase in imports.
(3)Unfavourable terms of trade.
(4)Inflation.
Write four measures to improve balance of payments of a country?
Following are four measures to improve the balance of payments of a country:
Increase in exports.
Decrease in imports.
Devaluation in currency.
Decrease in quantity of money.
