Net trade 2.2.5

Question 1

What are factors of net trade

Answer 1

1.Real income
2. Exchange rates
3. State of world economy
4. Protectionism
5. Non price factors

Question 2

What is real income

Answer 2

Income after inflation has been taken into account

Question 3

Why is income a factor of net trade

Answer 3

2. Consumption increases so AD increases therfore creates inflation, so UK goods less internationally competitive so exports decrease

1.people might import more goods as higher DP.

Question 4

Why might imports not increase even if income increases

Answer 4

Eval:

1.people might save even if income rises

Question 5

Why is state of world economy a factor of net trade

Answer 5

If trading partner in recession, exports from Uk decrease

Imports to uk uncrease as other country cheaper

Question 6

Why is protectionism a factor of net trade

Answer 6

Protects Uk firms from foreign investment by imposing tarrifs and quotas on goods. Therefore imports decrease

Question 7

What is a tariff

Answer 7

Tax on imports

Question 8

What are quotas

Answer 8

Limit on imports

Question 9

What are non price factors of net trade

Answer 9

International relations

Quality

Natural resources

Fashion