External Influences- International Trade And Free Trade

Question 1

What is international trade

Answer 1

Trading to different countries while production in the business’ domestic one

Question 2

Reasons for international trade

Answer 2

differences in technology, differences in resource endowments, differences in demand, the presence of economies of scale, and the presence of government policies.

Question 3

Purpose of barriers to international trade

Answer 3

shield or advance particular industries or segments of an economy.

Question 4

What is exchange rate

Answer 4

The value one currency for the purpose of it being converted into another

Question 5

Factors taken into account for businesses thinking about trading internationally

Answer 5

Exchange rates, competitiveness, growing globalization, tariffs and trade bariers, transportation costs, languages, cultures, various trade agreements

Question 6

Calculate exchange rate conversations

Answer 6

Starting amount/ the final amount= exchange rate

Question 7

Impacts of changes to exchange rates

Answer 7

If there is an appreciation on the currency, exports increase in price reducing your competitiveness abroad. A depreciation in currency will increase import costs which if you rely on these imports will reduce margin or price competitiveness domestically.

Question 8

Explain the relationship between increased globalisation and international trade

Answer 8

International trade is also a central driving force behind globalisation, a process of integration among countries and people.

Question 9

Sources of financial and non-financial support for businesses which trade internationally

Answer 9

Financial- financial angels, share selling, retained profits, trade credit, leasing
Non-financial- intellectual property, patterns, goodwill

Question 10

What is free trade

Answer 10

Policy that doesn’t restrict the flow of imports and exports

Question 11

Advantages and disadvantages of free trade

Answer 11

Advantages-They can open new markets, increase gross domestic product (GDP), and invite new investments
Disadvantages- fear of intellectual property, damages developing countries

Question 12

What is a trading bloc

Answer 12

where barriers to trade are reduced or eliminated among the participating states

Question 13

Advantages and disadvantages of trading bloc

Answer 13

Advantages- boosts direct investment, encourages domestic specialisation
Disadvantages- brings up trade division, creates greater economic reliance