International Trade

Question 1

What is meant by domestic (national) Trade?

Answer 1

meaning Domestic Trade: The trade that takes place between the individuals living in the same country is called domestic or national or internal Trade.

Question 2

What is meant by international Trade?
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Answer 2

meaning of International Trade: International trade is the trade that takes place between the inhabitants of two countries.

Question 3

Differentiate between national (internal) and international (external) Trade?
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Answer 3

Difference Between National and International Trade: The trade that takes place between the individuals living in the same country is called national or internal trade.
Conversely, The trade that takes place among the individuals living in different countries of the world is called international or external trade.
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Question 4

What is meant by balánce of trade?

Answer 4

Meaning of balance of Trade: The systematic record of the money value of visible • imports and visible exports of a country in one year is called balance of trade.
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Question 5

What is meant by balance of payments?
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Answer 5

meaning of Balance of payment: The systematic record of visible and invisible exports and imports of a country in one year is called balance of payments.
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Question 6

Define balance of payments in the words of Prof Kindle Berger?

Answer 6

It is the systematic record of all economic transactions of a country with the rest of the world.
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Question 7

Define balange of payments in the words of Prof Samuelson?

Answer 7

International balance of payments is all that transaction for which either foreign exchange is spent or received.
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Question 8

What is International monetary fund?

Answer 8

International Monetary Fund: An international organization has been established to maintain the balance of payments of different countries which is called intemational monetary fund.
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Question 9

What is the objective of establishment of international monetary fund?

Answer 9

The objective of establishment of international monetary fund is to maintain the balance of payments of its member countries. This organization provides foreign exchange to improve the balance of payments of its members.
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Question 10

Write six advantages of international trade?
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Answer 10

Following are six advantages of international trade
(1) : Acquisition of foreign goods.
Availability of goods in case of shortage.
• Export of surplus production.

It causes international peace.
(5) , Removal of monopolies.
(6)
Optimum use of productive resources.

Question 11

Write a few disadvantages of international trade?
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Answer 11

Following are a few disadvantages of international trade:
(1)-
Dependence on production of limited goods.
(2)
Dependence on other countries.
(3)
International effects of inflation and deflation on the economy.
(4)
Loss to backward countries.
(5)
Monopoly of developed countries on international market.
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(6)
Supply of goods injurious to health.

Question 12

Who did present classical theory of international trade?
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Answer 12

Classical theory of international trade was presented by Prof Adam Smith and Ricardo.
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Question 13

Who did present Absolute advantage theory of international trade?
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Answer 13

Prof Adam Smith presented the absolute advantage theory of international trade.
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Question 14

Who did present the comparative cost (comparative advantage) theory of international trade?

Answer 14

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Prof Ricardo presented comparative cost or comparative advantage theory of international trade.
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Question 15

Write the points of difference between domestic trade and international trade?
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Answer 15

Following are points of difference between domestic trade and international trade:
(1)
(2)
In mobility of labor and capital.
Difference in currencies.
- (3)
Difference in trade restrictions.
(4)
Difference in Government’s facilities.
(5)
Difference in trade agreements.
(6)
Difference in trade polices.
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Question 16

Write items of balance of payments?

Q.17: Which are invisible items of balance of payments?

Answer 16

There are two types of items of balance of payments.
(1)
Visible imports and exports.
(2)
Invisible items.

Following are invisible items,
(1)
Rewards of the services of foreign companies.
(2)
Expenditure on education in foreign countries:
(3)
Expenditure on Treatment in foreign countries.
(4)
Expenditure on Tourism.
(5)
Expenditure on political, cultural and trade delegates.
（6）
Expenditure on political issues.
E openditure on foreign loans.
Fina nial ait.
Foreign livestment and profit on it.
SHORT QUESTIONS
(10)
Man power earning.

Question 17

Name the classical theories of international trade?
(1)

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Answer 17

Absolute advantage theory of Adam Smith.
(2)
Comparative cost theory of Ricardo.

Question 18

What is meant by surplus balance of trade?

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What is meant by deficit or unfavourable balance of trade?

0.21: What is meant by balanced balance of trade?
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What is meant by surplus or favourable balance of payments?

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What is meant by deficit or unfavourable balance of payments?

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Answer 18

Meaning of Surplus Balance of Trade: If a country exports visible goods having value than that of visible goods imported by it, the balance of trade is said to be surg favourable.

Meaning of Deficit Balance of trade: If the value of visible exports.of a country that the value of its visible imports then its balance of trade will be deficit or

Meaning of Balanced Balance of trade: If the value of visible exports of a cour equal to the value of its visible imports, then it is called balanced balance of trade.

Meaning of Surplus Balance of Payments: If a country exports its visible and inv goods of more value than the value of its imports of visible and invisible goods, th balance of payments will be surplus or favourable.

Meaning of Deficity Balance of Payments: If a country exports its visible and inv goods of less value than the value of its imports of visible and invisible goods the balance of payments will be deficits or unfavourable.

Question 19

How can trade position of a country be examined either by taking into acc balance of trade or balance of payments?
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Answer 19

To examine the trade position of a country, instead of its balance of trade, its balan payments is taken onto account.
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Question 20

Write four causes of deficit balance of payments of a country?

Answer 20

Following are four causes of deficit balance payments:
(1)
Decrease in exports.
(2)
Increase in imports.
(3)
Unfavourable terms of trade.
(4)
Inflation.
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Question 21

Write four measures to improve balance of payments of a country?

Answer 21

Following are four measures to improve balance of payments of a country:
(1)
Increase in exports.
(2)
Decrease in imports.
(3)
Devaluation in currency.
(4)
Decrease in quantity of money.