Patterns Of Trade

Question 1

What is patterns of trade

Answer 1

Patterns of trade refers to the composition of a countries imports and exports

Question 2

What are the two patterns of trade

Answer 2

• geographical patterns of trade which is concerned whom the countries trade with
• commodity patterns of trade is concerned with what the countries are trading

Question 3

What factors affect patterns of trade

Answer 3

• comparative advantage
• emerging economies
• formation of trade blocs
• exchange rates

Question 4

How does comparative advantage affect patterns of trade

Answer 4

Changes in a countries factors production such as smaller workforce has an effect on the opportunity costs of producing a product, this could change the comparative advantage of producing a product. This change in comparative advantage will affect patterns of trade as consumers will shift their demand towards the country with comparative advantage
- leads to geographical chnages in pattern of trade

Question 5

How do emerging economies affect pattern of trade

Question 6

How does the formation of a trade bloc or bilateral trade agreements affect patterns of trade

Answer 6

• The formation of a trade bloc leads to removal or reduction in trade restrictions
• this makes trade in the trade bloc more attractive
• trade creation and trade diversion occurs
• Increasing trade within and towards the bloc
• trade diversion is when a country moves from a low cost producer to a high cost producer

Question 7

What is an example of a bilateral trade agreement

Answer 7

Preferential trade are

Question 8

What is a preferential trade area

Answer 8

A preferential trade are is when there is a agreement between countries to remove protectionist measures on a range of certain goods and services