Introduction Flashcards
Explain to the person next to you what the
government sector is responsible for.
The government is responsible for making laws and regulations. They help manage the number of jobs
created in the economy
What is free trade?
How do countries attempt to protect the
domestic market?
Free trade agreements (FTAs) are treaties between two or more countries
designed to reduce or eliminate barriers to trade and investment, and to
facilitate stronger trade and commercial ties between participating countries.
How do tariffs protect the
domestic market?
A tariff is a tax imposed on an imported good or service. A tariff increases the cost of the imported
good for the domestic consumer. This means domestic producers are now more competitive as their competitors have
to increase their prices (due to the tax).
How would a subsidy
assist a domestic producer?
A subsidy is a payment from the government to domestic producers. It is to help an industry or business keep the price of their good or service low.
How would a quota protect
the domestic market?
A quota is a physical limit on the quantity of a good or service that may be imported. The government will only allow a certain amount of a good or service
into the country. The government may also insist that the good or service have a certain percentage
made from local resources.
How do individuals benefit from trade? Tell the person next to you a specific
example.
✓ Availability of a wider range of goods and services.
✓ Access to cheaper goods and services.
✓ Increased employment and wealth domestically as
businesses grow to meet global demand for their
products.
✓ Increased opportunities for education.
✓ Increased connection to the rest of the world through
the sharing of resources and knowledge.
How do business benefit
from trade?
✓ Access to a larger customer base as products are
demanded globally.
✓ Access to cheaper raw materials and manufactured
goods in the production process.
✓ Cheaper manufacturing costs overseas, due to lower
labor costs and lower manufacturing costs.
✓ Access to a global network of similar businesses
allowing the sharing of information and innovation.
Outline 3 reasons nation benefit from global
trade. Give specific examples of each and
be prepared to share to the class.
✓ Interconnections between countries leading to greater
social and cultural understanding.
✓ Specialisation of manufacturing (e.g., if you can access
cheaper cars overseas then your country can focus on
producing and gaining the market share in clothing or
electronics.)
✓ In movement of money, knowledge and technology.
