Chapter 11: International Trade & Exchange Rates

Question 1

Surplus

Answer 1

Amount of something that is more than what is needed or used

Question 2

Exports

Answer 2

Goods & services sold overseas

Question 3

Imports

Answer 3

Goods & services bought from overseas

Question 4

Visible trade

Answer 4

Trade in physical goods

Question 5

Invisible trade

Answer 5

Trade in services

Question 6

Balance of trade/visible balance

Answer 6

Difference between visible exports & visible imports

Question 7

How does international trade benefit the world?

Answer 7

Benefits the world as it creates opportunities for business growth, increases competitiveness & provides more consumer choice

Question 8

What international trade enables countries to

Answer 8

• Obtain goods which cannot be produced domestically
• Sell off surplus commodities
• Obtain goods that can be bought more cheaply overseas

Question 9

Transactions

Answer 9

Business deals or actions such as buying or selling something

Question 10

Exchange rate

Answer 10

Value of one currency in terms of another

Question 11

Depreciation of exchange rate (exports)

Answer 11

Demands for exports likely to rise as they are now cheaper, exporters benefit

Question 12

Depreciation of exchange rate (imports)

Answer 12

Demands for imports likely to fall as they are now more expensive, importers lose out

Question 13

Appreciation of exchange rate (exports)

Answer 13

Demand for exports likely to fall as they are now more expensive, exporters lose out

Question 14

Appreciation of exchange rate (imports)

Answer 14

Demand for imports likely to rise as they are now cheaper, importers benefit

Question 15

International competitiveness

Answer 15

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)

Question 15

Higher exports benefits

Answer 15

More employment, income & tax revenues for that country

Question 16

Constantly varying exchange rates

Answer 16

Cause uncertainty for businesses as they cannot predict demand for exports & cost of imports. Planning & budgeting more difficult

Question 17

Lower exchange rate effect on imports

Answer 17

Price of imports rises, so importers will have to pay more for overseas goods

Question 18

Commission

Answer 18

Extra amount of money that is paid to a person or organisation according to the value of the goods they have sold or the services they have provided