Study Notes
International trade involves the buying and selling of goods and services across borders, leading to benefits such as increased competition and lower prices. International Trade — the exchange of goods and services across international borders. Example: A country exports cars to another country. Exports — goods and services produced domestically and sold abroad. Example: A country sells its locally made electronics to foreign markets. Imports — goods and services produced abroad and bought for domestic use. Example: A country buys foreign-made clothing for its citizens. Free Trade — trade without government intervention, allowing goods to move freely across borders. Example: Countries trading without tariffs or quotas. World Price — the price determined by global demand and supply for a good. Example: The international price of oil set by global market forces.
Exam Tips
Key Definitions to Remember
- International Trade
- Exports
- Imports
- Free Trade
- World Price
Common Confusions
- Mixing up exports and imports
- Confusing free trade with protectionism
Typical Exam Questions
- What is international trade? The exchange of goods and services across international borders.
- How does free trade affect domestic producers? It can lead to increased competition and efficiency.
- What are the benefits of international trade? Increased competition, lower prices, and greater choice.
What Examiners Usually Test
- Understanding of key terms like exports and imports
- Ability to explain the benefits of free trade
- Interpretation of diagrams showing trade impacts