International Trade Flashcards
What is domestic trade?
Domestic trade is the exchange of goods and services within a country’s borders.
Define international trade.
International trade is the exchange of goods and services between countries.
What are other terms for international trade?
International trade is also known as foreign trade or external trade.
What are the purposes of international business for governments?
Governments undertake international business for profit and political reasons.
What is international finance?
International finance studies the dynamics of foreign exchange and cross-border monetary transactions.
Why is international finance important?
It helps organizations engage in global trade by understanding capital markets and exchange rates.
What is a benefit of studying international finance?
It aids in understanding consumption and production patterns across economies.
What are three advantages of international finance?
Understanding consumption patterns, guiding investments, and understanding production patterns.
What factor encourages trade between nations?
Differences in natural resources encourage trade.
How do climatic differences affect trade?
Different climates favor the production of certain crops, creating a need for trade between countries with different climates.
How does human resource quality impact international trade?
Countries lacking skilled labor may rely on imports for certain goods and services.
Why do some countries buy capital-intensive products instead of producing them? They may lack the capital needed for production.
They may lack the capital needed for production.
Fill in the blank: International business involves transactions across ____________.
national borders.
True or False: Private companies engage in international business only for political gain.
False. Private companies engage in international business mainly for profit, while governments may do so for profit and political reasons.
Explain how differences in natural resources lead to international trade.
Since resources like crude oil, coal, or minerals are not evenly distributed, countries that lack them must import from countries with surpluses.
Why might a country in a tropical region be involved in international trade?
Tropical regions may produce agricultural goods suited to their climate, like cocoa or coffee, which they export to countries in different climate zones.
Provide two reasons why countries engage in international trade.
Countries engage in trade due to differences in resources, climatic conditions, production techniques, foreign exchange needs, and consumer preferences.
Give an example of a country where climate supports a specific crop, explaining its role in trade.
Thailand has a climate favorable for rice production, which allows it to export rice to countries with less suitable climates for rice cultivation.
How can international finance help investors?
It guides investors by providing insights into global market trends, helping them make informed investment decisions.
List three advantages of studying international finance.
Understanding consumption and production patterns, guiding investment, and monitoring foreign exchange rates.
What are two main risks involved in international trade?
Exchange rate fluctuations and political risks.
Describe the impact of exchange rate fluctuations on international trade.
Exchange rate changes can make imports more expensive or exports less competitive, affecting profit margins for businesses engaged in international trade.
How does political risk impact international business?
Political instability or changes in government policy in a country can disrupt trade agreements, affect foreign investments, and increase the cost of doing business.
Describe how international trade can enhance economic growth.
It raises economic welfare by opening markets, reducing poverty, and encouraging specialization.
