1) International Trade - MMT

Question 1

what are exports?

Answer 1

goods and services produced by businesses in a particular country but then sold to economic agents in a different country

Question 2

what are imports?

Answer 2

when economic agents within our country demand goods and services that are produced within a different country

Question 3

exports are a i…

Answer 3

injection in to AD

Question 4

imports are a w…

Answer 4

withdrawal

Question 5

what is international trade?

Answer 5

the movement of goods and services between countries

Question 6

why are exports good for the country?

Answer 6

the earn income for the country, increasing AD, real GDP and RDI levels

Question 7

what do imports do for households?

Answer 7

• increase choice
• improve the quality of life for households within an economy

Question 8

how do imports increase efficiency?

Answer 8

imported competition increases the efficiency of domestic businesses - they have to raise their game to help them compete with overseas companies

Question 9

how do exports increase efficiency?

Answer 9

domestic businesses have to compete in efficiency and quality or they won’t gain orders

Question 10

what do imports do to the price?

Answer 10

reduces the price for consumers; more competition is vital in preventing the growth of domestic monopolies who could charge higher prices

Question 11

what 3 things does international trade allow for all countries?

Answer 11

1) access to key resources
2) specialise
3) co-operation

Question 12

why is it good that international trade allows all countries to access key resources?

Answer 12

because they may not have them themselves, eg oil,gas

Question 13

why is it good that international trade allows all countries to specialise?

Answer 13

because it greatly increases efficiency and productivity

Question 14

why is it good that international trade increases co-operation between countries?

Answer 14

reducing risks of wars/conflicts

Question 15

Pattern 1: why is it argued international trade has grown enormously in the modern age?

Answer 15

up to about 150 years ago (say 1870), international trade consistently accounted for about 10% of global GDP. By 1970, this figure had reached 25%. In 2022, it was almost 60%.

Question 16

Pattern 2: why is it argued that in recent years, the rapid growth of international trade has slowed down a little, even slightly declined?

Answer 16

In the last 15 years the growth in international trade has slowed down. The peak year was 2008 where trade was 61% of global GDP. Since then it’s ranged from a low of 52% (2020) to an average of 56/57%

Question 17

Pattern 3: why is it argued that a growth in Intra-regional trade and a relative decline in inter-regional trade?

Answer 17

In the last 20/25 years, there had been a movement towards countries trading more with neighbouring countries and less with faraway countries. This has been enhanced by an increase in regional trading blocs (the EU, NAFTA, ASEAN) and the relative decline in importance of institutions like the British Commonwealth

Question 18

what is Intra-regional trade?

Answer 18

within a region eg USA to Mexico

Question 19

What is inter-regional trade?

Answer 19

between different parts of the world

Question 20

Pattern 4: why is it argued that a big growth in the value of international trade in services, though it remains lower than trade of goods?

Answer 20

Trade in services also continues to grow. Major examples are transport, tourism and financial services. Although the increases in this aspect of trade is significant, the value of international trade in services is considerably lower that then the value of international trade in goods. Many services lend themselves mainly to local provision

Question 21

Pattern 5: why is it argued that a growth in developing and emerging economies are now a much bigger player in the world of international trade?

Answer 21

A highly significant change in the parents of international trade surrounds the relative importance of different types of economy. In 1990, exports from developed economies (eg Japan/Germany etc) accounted for 66% of all transactions. In 2022, this had fallen to 52%. By contrast, the % of international trade exported by emerging (India) or developing economies (eg Congo) increased from 33% to 48%

Question 22

what are the advantages of developed economies in international trade?

Answer 22

greater choice/lower prices for households

Question 23

what are the advantages of emerging economies in international trade?

Answer 23

more jobs, higher GDP, higher RDI, increased standards of living

Question 24

what are the advantages of developing economies in international trade?

Answer 24

improvements in infrastructure and basic services- higher RDI, better standards of living, higher HDI

Question 25

what are the disadvantages of developed economies in international trade?

Answer 25

loss of jobs, especially in manufacturing

Question 26

what are the disadvantages of emerging economies in international trade?

Answer 26

environmental harm, higher levels of inequality

Question 27

what are the disadvantages of developing economies in international trade?

Answer 27

• environmental harm
• lack of sustainability - eg exploitation by MNCs based in developed countries