CHAPTER 10

Question 1

Meaning of Internal trade:

Answer 1

It means the exchange of goods and services within the boundaries of a nation. It is also called as “domestic trade” or “home trade”.

Question 2

Meaning of foreign trade:

Answer 2

Also known as the international trade or external trade.
It is the exchanging of goods and services across boundaries of a country.

Question 3

Definition of international trade:

Answer 3

International trade consists of transaction between residents of different countries.

Question 4

Types of foreign trade:

Answer 4

1. Import trade
2. Export trade
3. Entrepot trade

Question 5

Meaning of Import trade:

Answer 5

It is the buying of goods and services from other foreign country to home country. Excessive import can have a negative impact on the home country.

Question 6

Meaning of Export trade

Answer 6

It is the selling of goods and services by home country to other foreign countries. Excessive export trade can have a positive impact on the home country.

Question 7

Meaning of Entrepot Trade:

Answer 7

It means buying of goods and services from one country and then selling them to another country after some processing operations.

Question 8

Role / importance / need of Foreign trade:

Answer 8

1. Brings Reputation and Helps earn goodwill
2. Encourrages Investment
3. To earn Foreign exchange
4. Division of labour and specialization
5. Optimum allocation and utilization of resources
6. Stability in price level
7. Availability of multiple choices

Question 9

Defnition of Balance Payments by Ellsworth:

Answer 9

Balance of payments is a summary statement of all the transactions between the residents of one country and the rest of the world.

Question 10

Definition of Balance of Trade by Bentham:

Answer 10

“Balance of trade of a country is the relation over a period between the values of her exports and imports of physical goods.”