Unit 2.2 World Trade

Question 1

Define “natural resource”

Answer 1

A product provided by the earth

Question 2

Define “import”

Answer 2

Bring goods and services into the country

Question 3

Define “export”

Answer 3

Send goods and services to another country for sale

Question 4

What is meant by “foreign exchange”?

Answer 4

The currency of other countries used for trade

Question 5

What is meant by commodities?

Answer 5

Raw materials such as fuels and other minerals as well as agricultural products.

Question 6

Name two benefits to consumers of international trade

Answer 6

More choice of goods and prices.

Question 7

Name a benefit to producers brought about by world trade.

Answer 7

A bigger market in which to sell more goods.

Question 8

Define “devaluation”

Answer 8

When a country’s currency is reduced in value compared with other currencies.

Question 9

What is meant by a trade deficit?

Answer 9

It is when the value of a country’s exports is lower than its imports.

Question 10

What is the opposite of a trade deficit?

Answer 10

A trade surplus

Question 11

Name three ways in which a country can overcome a trade deficit

Answer 11

Develop industries to supply the domestic (home) market and so become less reliant on imports.
Encourage the growth of industries that will export high value goods e.g processed foods.
Increase the exploitation of mineral wealth for export.
Increase the production of crops for export.
Develop other industries such as tourism.
Devalue the currency.

Question 12

How does devaluation help reduce a trade deficit?

Answer 12

It makes exports cheaper and therefore more attractive to buyers.

Question 13

Define ‘neo-colonialism”

Answer 13

New form of dependence of a developing country on another country.

Question 14

Give an example of a neo-colonial relationship which resulted in a trade deficit for a developing nation.

Answer 14

Chad - France

Question 15

Give an example of a country that has needed to diversify after reliance on non-renewable reserves. What did it move on to?

Answer 15

Angola - Mining of bauxite, natural gas extraction

Question 16

Define “Extractive Industries”

Answer 16

Those that take resources out of the ground

Question 17

What is meant by “diversify”?

Answer 17

Give more variety to a range of products.

Question 18

What is meant by “exhausted”

Answer 18

Completely used up

Question 19

Name 3 growing export industries

Answer 19

Tourism
Finance and insurance
Computer and IT industries
Communication
Construction

Question 20

Name the stretch of water that crossed central America to join the Pacific ocean and the Caribbean Sea

Answer 20

The Panama Canal

Question 21

Name 2 NIC’s

Answer 21

Brazil
Russia
India
China
South Africa

Question 22

What does FTA / FTZ stand for?

Answer 22

Free Trade Area / Free Trade Zone

Question 23

Define “quota”

Answer 23

Physical limit to the quantity of goods allowed to be imported.

Question 24

What is an import tariff?

Answer 24

A tax on imports.

Question 25

What is meant by and FTA / FTZ?

Answer 25

It is when a group of countries join together to form a trade area in which goods and services can be traded without quotas or tariffs e.g European Union or SADC (South africa Development Community.

Question 26

Define “exchange rates”

Answer 26

The value of a currency for the purpose of converting it to another.

Question 27

What is the name of the organisation that deals with global rules of trade?

Answer 27

WTO World Trade Organisation

Question 28

Name 3 ways the WTO tries to get trade to flow freely

Answer 28

Cutting tariffs and reducing subsidies on agricultural goods.
Reducing or removing tariffs on non-agricultural goods especially from developing counties.
Promoting trade in environmental technologies & renewable energy

Question 29

What does OPEC stand for?

Answer 29

Organisation od Petroleum Exporting Countries.

Question 30

Name 4 countries in OPEC

Answer 30

Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, Indonesia, Libya, The United Arab Emirates, Algeria, Nigeria, Equador, Gabon, Angola.

Question 31

What is the aim of OPEC

Answer 31

To prevent oil prices fluctuating on the world market, so that there is a regular supply for consumers and a steady supply of income for exporting countries as well as reasonable profit for oil companies such as Exxon Mobil, Shell, Total and BP.

Question 32

Name two reasons prices of agricultural produce may vary on the world market.

Answer 32

Changes in supply - due to weather, political instability etc
Changes in demand - due to health scares, fashion, seasons etc

Question 33

Define “monopoly”

Answer 33

When a single company controls the supply of or trade in a particular product.

Question 34

What is a Fairtrade Premium?

Answer 34

A grant paid to farmers by the Fairtrade Foundation which can be invested in their business.