International trade

Question 1

Imports

Answer 1

goods or services bought from overseas

Question 2

Diversify

Answer 2

Where a business enters a completely new market where it does not operate

Question 3

What prevents a country from producing certain goods domestically?

Answer 3

They do not have the natural resources that enable such production.

Question 4

What are two reasons for other countries being able to produce goods more cheaply and efficiently?

Answer 4

They have cheaper resources
They have become experts of producing through specialization

Question 5

Define reserves-

Answer 5

Amount of something valuable such as oil, gas or metal ore

Question 6

What are the three things a country can do with the foreign currency they make off of international trade and explain-

Answer 6

• It can be used to invest in domestic industries and infrastructure which will lead to economic growth and development.
• It can be used to pay of loans or debts to other countries or international organizations which can help improve the countries credit worthiness and financial stability.
  -The foreign income gained can be used to purchase other good and services from overseas which will provide the domestic customers with an wide variety and availability of goods.

Question 7

Elaborate on selling off unwanted commodities

Answer 7

In this they trying to give the idea that a nation may produce a large output of a certain commodity and it can never fully be used by the domestic consumers so they can instead sell it to other countries.

Question 8

Define exports

Answer 8

goods and services which are sold overseas

Question 9

As an economy develops, a greater proportion of its income is generated off of the provision of services. Give three reasons as to why this is and elaborate on them.

Answer 9

As an economy develops, the population tends to become wealthier and more educated, leading to higher demand for services such as healthcare, education, and finance.

Additionally, the development of technology and automation in manufacturing and agriculture reduces the need for labor in these sectors, causing a shift towards service-oriented jobs.

Lastly, services tend to have higher profit margins than goods, making them more attractive to businesses and investors looking for higher returns on their investments.

Question 10

define the flows of money

Answer 10

Movement of money between countries resulting from transactions

Question 11

define the flows of money

Answer 11

Movement of money between countries resulting from transactions

Question 12

Define primary income

Answer 12

The flows of money, such as rents, profits and interesting resulting from the ownership of assets overseas.

Question 13

Secondary income

Answer 13

The flows of money between a government and other organizations

Question 14

What does secondary and primary income have in common?

Answer 14

Flows of money do not result from the exchange of goods and services.

Question 15

Define balance of payment

Answer 15

A record of all transactions relating to international trade.

Question 16

Visible balance

Answer 16

The difference between the value of the visible exports and the value of the visible imports.

Question 17

Current account

Answer 17

Part of the balance of payments where all imports and exports are recorded

Question 18

What’s another name for visible balance

Answer 18

Balance of trade

Question 18

Capital and financial account

Answer 18

The part of the balance of payments that record transactions relating to savings and investments

Question 19

Current balance

Answer 19

Difference between a nations exports and imports of goods and services.

Question 20

A current account deficit

Answer 20

Where the value of imports exceed the value of exports on the current account. CB is negative.

Question 21

Define current account surplus

Answer 21

Where the value of exports exceed the value of imports on the current account. CB is positive.

Question 22

Describe what will happen to the capital and financial account and current account of the home country and the foreign country when a domestic citizen chooses to invest 50,000% in a company based in that foreign country.

Answer 22

Check yourself

Question 22

Describe what will happen to the capital and financial account and current account of the home country and the foreign country when a domestic citizen chooses to invest 50,000% in a company based in that foreign country.

Answer 22

Check yourself