Chapter 11: International Trade & Exchange Rates Flashcards
Surplus
Amount of something that is more than what is needed or used
Exports
Goods & services sold overseas
Imports
Goods & services bought from overseas
Visible trade
Trade in physical goods
Invisible trade
Trade in services
Balance of trade/visible balance
Difference between visible exports & visible imports
How does international trade benefit the world?
Benefits the world as it creates opportunities for business growth, increases competitiveness & provides more consumer choice
What international trade enables countries to
- Obtain goods which cannot be produced domestically
- Sell off surplus commodities
- Obtain goods that can be bought more cheaply overseas
Transactions
Business deals or actions such as buying or selling something
Exchange rate
Value of one currency in terms of another
Depreciation of exchange rate (exports)
Demands for exports likely to rise as they are now cheaper, exporters benefit
Depreciation of exchange rate (imports)
Demands for imports likely to fall as they are now more expensive, importers lose out
Appreciation of exchange rate (exports)
Demand for exports likely to fall as they are now more expensive, exporters lose out
Appreciation of exchange rate (imports)
Demand for imports likely to rise as they are now cheaper, importers benefit
International competitiveness
Improves if there is sustained depreciation in exchange rate, because demand for exports rise as they are now cheaper (positive impact on economy of that country)
