internal trade & exchange rates

Question 1

what is the difference between exports and imports

Answer 1

exports are goods and services sold overseas, while imports are goods and services bought from overseas

Question 2

what is visible trade

Answer 2

the trade in physical goods

Question 3

what is invisible trade

Answer 3

the trade in services

Question 4

what is the balance of trade

Answer 4

the difference between visible exports and visible imports

Question 5

what is an exchange rate

Answer 5

an exchange rate is the value of one currency in terms of another currency

Question 6

what does it mean for a currency to appreciate

Answer 6

the value of a currency rises in terms of another currency

Question 7

what does it mean for a currency to depreciate

Answer 7

the value of a currency falls in terms of another currency

Question 8

what benefits does international trade create for customers

Answer 8

competition, consumer choices, and cheaper products

Question 9

what happens when exchange rates rise

Answer 9

when exchange rates rise, exports become more expensive, reducing demand, imports become cheaper, and the current account balance worsens

Question 9

why do countries engage in international trade

Answer 9

to obtain goods they cannot produce domestically or cheaply and to sell off excess commodities

Question 10

what happens when exchange rates fall

Answer 10

when exchange rates fall, exports become cheaper and demand increases, imports become more expensive, and the current account balance improves

Question 11

how does exchange rate depreciation impact international competitiveness

Answer 11

depreciation helps exporters as their goods become cheaper, but increases costs for importers, making their goods more expensive