Lesson 12 - Trade Flashcards
What is trade?
Trade involves the buying and selling goods and services with other countries
Why do countries trade?
Countries trade when they do not have the resources or capacity to satisfy their own needs and wants.
What does specialising in certain goods allow countries to do?
By specialising in certain goods countries can produce a surplus and trade this for the resources they need.
What are imports?
The purchase of goods and services from abroad that leads to an outflow of currency from the UK.
What are exports?
The sale of goods and services to buyers in other countries leading to an inflow of currency to the UK.
Give examples of items that the UK is a net importer of?
Machinery
Vehicles
Clothing
Electrical machinery
Give examples of items that the UK is a net exporter of?
Organic chemicals
Beverages
Aircraft
Pharmaceuticals
Give two reasons why the UK exports goods?
To find a market for excess production that cannot be sold at home
To sell products at higher prices
Give three reasons why the UK imports goods?
Goods that are not available in the domestic market
Goods that are less expensive or better quality from abroad
A wide range of products can be bought
What are the impacts of UK exports?
Exports create income for UK firms and employment opportunities
Exports add to the circular flow of income
What are the impacts of UK imports?
Imports allow consumers to buy cheaper products reducing inflation
Imports allow firms to acquire raw materials for production, reducing costs
What is the balance of payments?
The current account of the Balance of Payments records transactions made between consumers, businesses and the government in one country with other countries.
