Chp-19 ~ Nature And Scope Of Foreign Trade

Question 1

Types of foreign trade

Answer 1

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

Question 2

What are the characteristics of foreign trade?

Answer 2

1. Territorial specialisation
2. International competition
3. Long chain of middlemen
4. Mutually acceptable currency
5. Government control
6. Several documents

Question 3

Difference between internal and external trade

Answer 3

1. Geographical limits
   Within the boundaries of one country || Across the boundaries of a country
2. Mode of transport
   Railways and roadways || Shipping and airways
3. Currency
   Domestic currency || Foreign exchange
4. Mode of payments
   Payments can be made either in cash or by cheque on a national bank || Payments are made through cheques drawn on international banks
5. Language for communication
   Local language || Foreign language

Question 4

What are the problems or difficulties in international trade?

Answer 4

1. Distance
2. Different language
3. Difficulty in transportation
4. Import and export restrictions
5. Problems in payment
6. Intense competition

Question 5

What are the advantages of international trade?

Answer 5

1. Optimum use of resources
2. Economic development
3. Economies of scale
4. Higher standard of living
5. International brotherhood
6. Security from famine

Question 6

What are the disadvantages of international trade?

Answer 6

1. Economic dependence
2. Restricted growth of home industries
3. Misuse of natural resources
4. Political exploitation
5. Import of harmful goods
6. Rivalry among nations

Question 7

What is the B/P?

Answer 7

Balance of payments means a systematic record of all economic transactions between the residents of one country and residents of foreign countries during a given period of time usually, one year.
It contains a classified record of all receipts and payments on account of goods exported, services rendered and capital received by residents in a country and payments made by them on account of goods imported, services received and capital transferred to non-residents or foreigners of other countries.

Question 8

What are the features of B/P?

Answer 8

1. It is a systematic record of all economic transactions between one country and rest of the word.
2. It relates to a particular period time, usually one year.
3. It includes all receipts and payments, visible and invisible.
4. It includes all economic transactions both on current account and capital account.
5. It adopts the double entry system book keeping.
6. It shows the country’s position in world trade.