International Trade

Question 1

what is international trade?

Answer 1

this is the exchange of goods and services between countries

Question 2

what is intra-regional trade?

Answer 2

intra regional trade is when neighbouring countries enter in an agreement in order to boost trade

Question 3

what is free trade?

Answer 3

this is when there are no restrictions on the flow of goods and services between countries

Question 4

what is a trading bloc?

Answer 4

a group of countries that join together and agree to increase trade between them

Question 5

what is gravity theory?

Answer 5

countries tend to trade most with coutries in close proximity

Question 6

what is south side trade?

Answer 6

this is trade between developing coutries

Question 7

what are the advantages and disadvantages for a developing country with international trade?

Answer 7

advantages:
-falling prices for consumers, as access to cheaper goods
- increased employment in export industries
-injection in demand into the circular flow of income

disadvantages:
- volatile prices
-exports may suffer from external shocks

Question 8

what are the advantages and disadvantages of a developed country with international trade?

Answer 8

advantages:
- access to natural raw material
- allows wider consumer choice
-wider markets for their output
-economies of scale
-better quality goods

Disadvantage:
-too much reliance on other countries(shocks)p

Question 9

what is a customs union ?

Answer 9

This is when a group of coutries, all have a common external tarrif on coutires outside of there trading bloc, within this trade bloc there is no restction in the flow of goods and services.
e.g EU