1) International Trade - MMT Flashcards
what are exports?
goods and services produced by businesses in a particular country but then sold to economic agents in a different country
what are imports?
when economic agents within our country demand goods and services that are produced within a different country
exports are a i…
injection in to AD
imports are a w…
withdrawal
what is international trade?
the movement of goods and services between countries
why are exports good for the country?
the earn income for the country, increasing AD, real GDP and RDI levels
what do imports do for households?
- increase choice
- improve the quality of life for households within an economy
how do imports increase efficiency?
imported competition increases the efficiency of domestic businesses - they have to raise their game to help them compete with overseas companies
how do exports increase efficiency?
domestic businesses have to compete in efficiency and quality or they won’t gain orders
what do imports do to the price?
reduces the price for consumers; more competition is vital in preventing the growth of domestic monopolies who could charge higher prices
what 3 things does international trade allow for all countries?
1) access to key resources
2) specialise
3) co-operation
why is it good that international trade allows all countries to access key resources?
because they may not have them themselves, eg oil,gas
why is it good that international trade allows all countries to specialise?
because it greatly increases efficiency and productivity
why is it good that international trade increases co-operation between countries?
reducing risks of wars/conflicts
Pattern 1: why is it argued international trade has grown enormously in the modern age?
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%.