International Trade And Free Trade

Question 1

Define international trade

Answer 1

International trade refers to selling across boarders

Question 2

Name 3 reasons why countries internationally trade

Answer 2

1. Access to an increased number of consumers
2. Can access cheaper cost of production
3. Specialisation of counties
4. Avoid conflict as interdependent on each other

Question 3

What is the purpose of trade barriers (3 parts)

Answer 3

Reduce trade deficit - more expensive to import - encourages domestic spending

Question 4

Name 3 factors that effect international trade

Answer 4

1. Language differences
2. Exchange rates
3. Cultural differences
4. Logistics
5. Buying habits

Question 5

Define globalisation

Answer 5

The increased integration and interdependence on the worlds economies

Question 6

Name one way in which globalisation has facilitated international trade

Answer 6

Lead to increased competition so firms look to source cheaper materials. This increases international trade as buy from cheaper FOP countries

Question 7

Name 3 pros of international trade

Answer 7

1. EOS
2. Increased market size
3. Customers get cheaper prices

Question 8

Name 3 cons of free trade

Answer 8

1. Environment damaged
2. Countries with abundant supply will dominate
3. Tariffs protect domestic jobs as it encourages domestic trade

Question 9

Define what a trading bloc is

Answer 9

A trading bloc is a type of intergovernmental agreement where barriers to trade are reduced or eliminated amount participating states

Question 10

Name 3 pros of a trading bloc

Answer 10

1. Souled increase exports
2. EOS
3. Cheaper consumer prices
4. Access to new markets
5. Can increase stability of firms by selling abroad

Question 11

Name 3 cons of trading blocs

Answer 11

1. Threat of wage decreases
2. Environment gets impacted
3. Comply to countries quality standards
4. Foreign firms have cheaper labour costs so can continue to compete in trading blocs