Importance of International Trade to the UK

Question 1

describe the importance of trade to economies

Answer 1

• allows economies to specialise at what they are good at and then exchange these products with other countries
• creates a greater choice, of better quality products, at cheaper prices
• creates more jobs and leads to economic growth
• contributes to price stability, as imports can be a lot cheaper than domestically produced products

Question 2

state some of the main types of exports from the UK economy

Answer 2

• machinery, nuclear reactors, boilers
• aircraft
• plastics
• organic chemicals

Question 3

state some of the main types of imports to the UK economy

Answer 3

• crude oil
• medical apparatus
• machinery

Question 4

explain some of the advantages of trade.

Answer 4

• growth: UK businesses can increase in size. this enables them to benefit from economies of scale, therefore lowering unit costs
• new markets: greater scope for moving into new markets, this can be done by adapting current products to local markets
• increasing sales and profits: growing in size and entering new markets allows the business to sell more products - this should lead to greater profits

Question 5

explain the consequences of global interdependence to the UK economy

Answer 5

• increased competition from overseas for UK firms: this comes at the expense of domestic firms so demand will fall for UK goods and services
• UK firms benefit from buying imports from overseas and selling them onto UK consumers: UK firms profit from this by adding value
• UK firms compete internationally, by selling to overseas market by offering: better designs and higher quality products