International Trade and World Markets Quiz
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Questions and Answers

What is indicated by a favourable Terms of Trade (TOT)?

  • TOT is equal to 100
  • TOT is greater than 100 (correct)
  • TOT indicates equal exports and imports
  • TOT is less than 100

    • Which of the following scenarios describes a negative balance of trade?

  • Imports are less than exports
  • Exports are greater than imports
  • Expenditure on imports equals expenditure on exports
  • Imports are greater than exports (correct)

    • What is the primary aim of international trade?

  • To ensure nations become economically self-sufficient
  • To grow the economy and reduce poverty (correct)
  • To increase tariffs on imports
  • To limit job opportunities in the domestic market

    • What characterizes free trade?

    <p>Trade without restrictions or tariffs</p> Signup and view all the answers

    Which of the following is NOT a form of trade barrier?

    <p>Free trade agreements</p> Signup and view all the answers

    What is a possible effect of imposing subsidies for local industries?

    <p>Decreased competition from foreign imports</p> Signup and view all the answers

    In which situation would a country's Terms of Trade (TOT) be equal to 100?

    <p>Exports and imports are equally valued</p> Signup and view all the answers

    Why do governments impose trade barriers?

    <p>To protect local manufacturers from international competition</p> Signup and view all the answers

    What is the primary goal of the World Trade Organization (WTO) regarding developing countries?

    <p>To support their integration into global trade</p> Signup and view all the answers

    What defines international trade?

    <p>The transfer of ownership of goods and services across borders</p> Signup and view all the answers

    What usually characterizes the commodities traded by Less Economically Developed Countries (LEDCs)?

    <p>Mostly raw materials</p> Signup and view all the answers

    How do the traded commodities of More Economically Developed Countries (MEDCs) generally differ from those of LEDCs?

    <p>MEDCs typically trade processed and finished products</p> Signup and view all the answers

    What role does the market play in international trade?

    <p>It provides systems for buyers and sellers to trade</p> Signup and view all the answers

    Which of the following types of trade involves exchanges between two countries?

    <p>Bilateral trade</p> Signup and view all the answers

    What is a significant challenge faced by LEDCs in global trade?

    <p>Limited access to international markets</p> Signup and view all the answers

    What is the role of WTO technical assistance regarding developing countries?

    <p>To enhance their capacity to trade</p> Signup and view all the answers

    What is one key principle of Fair Trade?

    <p>Creating opportunities for farmers to access MEDC markets</p> Signup and view all the answers

    How does Fair Trade ensure fair wages for producers?

    <p>Producers are involved in determining the prices of their production</p> Signup and view all the answers

    Which of the following is NOT an impact of globalization?

    <p>Decreased cultural exchanges between nations</p> Signup and view all the answers

    What role do multinational corporations play in globalization?

    <p>They control world resources and operate globally</p> Signup and view all the answers

    Which of the following is a benefit of fair trade for women?

    <p>Women receive fair wages for their work and services</p> Signup and view all the answers

    Which statement best describes 'open borders' in the context of globalization?

    <p>Borders are becoming less important for trade and migration</p> Signup and view all the answers

    What is one consequence of improved communication due to globalization?

    <p>Countries are better linked to share knowledge</p> Signup and view all the answers

    Which of the following is a primary focus of global governance related to globalization?

    <p>To regulate global economic activities</p> Signup and view all the answers

    What is one of the main benefits of multinational corporations (MNCs) in host countries?

    <p>Increased employment opportunities</p> Signup and view all the answers

    How does globalization enhance access to information?

    <p>By spreading knowledge and innovations faster</p> Signup and view all the answers

    What negative impact does outsourcing have in developed countries?

    <p>Loss of jobs due to job relocation</p> Signup and view all the answers

    What is one reason for the economic interdependence caused by globalization?

    <p>Potential for global financial crises</p> Signup and view all the answers

    Which factor can limit the advantages of globalization for some nations?

    <p>Insufficient infrastructure</p> Signup and view all the answers

    What role do global associations like the United Nations and World Bank play?

    <p>Regulate international disputes and assist in development</p> Signup and view all the answers

    What is a characteristic of export-led development?

    <p>It may involve shifting focus away from local needs</p> Signup and view all the answers

    Which of the following is an disadvantage associated with MNCs?

    <p>They elevate local income inequalities</p> Signup and view all the answers

    Study Notes

    International Trade and World Markets

    • Trade involves the transfer of goods and services between individuals or entities.
    • International trade involves cross-border movement of goods and services.
    • Bilateral trade involves two countries, while multinational trade involves more than two countries.
    • International trade provides countries access to goods and services from other countries.
    • Markets facilitate international trade by connecting buyers and sellers.
    • Commodities are traded items, which can be either raw materials or finished products.
    • Less Economically Developed Countries (LEDCs) primarily trade raw materials, while More Economically Developed Countries (MEDCs) trade processed and finished products.
    • This difference in trade commodities results in LEDCs having a smaller share of global trade due to lower value raw material exports compared to high-value processed products traded by MEDCs.

    Terms of Trade (TOT)

    • TOT describes the relationship between export prices and import prices for a country.
    • A favorable TOT occurs when export prices are higher than import prices.
    • TOT can be calculated as (Exports value + Imports value) x 100.
    • A TOT of 100 indicates balanced imports and exports.
    • A favorable TOT will be greater than 100, while an unfavorable TOT will be less than 100.

    Balance of Trade

    • Balance of trade refers to the difference between a country's exports and imports.
    • A negative balance of trade means imports exceed exports.
    • A positive balance of trade means exports exceed imports.

    Trade Relationships

    • International trade aims to boost economic growth and improve living standards in countries.
    • Trade relationships are categorized into free trade, trade barriers, and fair trade.

    Free Trade

    • Free trade involves unrestricted trade between countries.
    • Open borders facilitate the free flow of goods and services (commodities) between countries.
    • Free trade minimizes tariffs, customs duties, and other trade barriers, aiming to benefit all trading partners.
    • Countries with similar economic systems often establish free trade agreements.

    Trade Barriers

    • Trade barriers aim to protect domestic manufacturers from international competition.
    • Governments implement measures to increase the prices of imported goods. These include:
      • Import tariffs and taxes
      • Subsidies for local industries
      • Quotas on imported goods
    • Trade barriers are used to protect jobs, safeguard domestic products, and encourage local industries.

    Fair Trade

    • Fair trade supports farmers in LEDCs by paying them fair prices directly.
    • The relationship in fair trade is direct between producers and consumers, bypassing national trade channels.
    • Fair trade ensures better working conditions and prevents exploitation of workers.
    • Core principles of fair trade include:
      • Creating opportunities for direct connection between farmers and MEDC markets.
      • Ensuring fair and stable prices for producers and fair wages for workers.
      • Promoting social development through long-term partnerships.
      • Achieving gender equality by ensuring fair pay for women's work.

    Globalisation

    • Globalisation signifies the interconnectedness of societies.
    • It involves the increasing flow of goods, services, capital, technology, ideas, information, and people across national borders, contributing to a global economy and society.
    • Globalisation has led to the worldwide expansion of certain brands and the spread of global communication and governance.

    Impacts of Globalisation on Development

    • Globalisation has seven primary impacts on development:
      • Facilitation of trade and exchange of goods
      • Improved communication and knowledge sharing
      • Emergence of global governance for regulating economic activities
      • Increased open borders for free movement of people, goods, and ideas
      • Rise of multinational corporations with global operations
      • Stimulation of economic growth
      • Increased migration both within and across national borders

    Advantages of Globalisation

    • Multinational corporations (MNCs) create employment opportunities, offer higher wages and working conditions in host countries, and contribute to the spread of knowledge and innovation.
    • Globalisation improves disaster response and relief efforts, promotes cultural tolerance and appreciation, and facilitates remittances from migrant workers to their home countries.
    • Global associations like the United Nations, World Bank, International Monetary Fund, and World Trade Organisation regulate international disputes and support development programs.
    • Outsourcing creates employment opportunities in developing countries through call centers and manufacturing industries.
    • Global awareness, responsibility, and accountability contribute to environmental protection.

    Disadvantages of Globalisation

    • Increased trade and travel contribute to the spread of diseases.
    • Economic interdependence leads to global financial crises.
    • Demand for new materials and unsustainable use of resources strain the environment.
    • Lack of infrastructure hinders some nations from participating in global advancement.
    • MNCs exert economic and political influence in host countries.
    • Income inequalities rise as MNCs create an upper-middle class.
    • Outsourcing leads to unemployment in developed countries and may result in sweatshops in LEDCs.
    • Global regulations impact policies and choices of nation-states.

    Export-Led Development

    • Export-led development is an economic strategy employed by developing nations to catch up to developed nations.
    • It aims to boost wealth by increasing exports through:
      • Investing in industries, manufacturing, and education to develop specialised export products.
      • Reinvesting export earnings back into social and physical infrastructure.
    • Countries like Hong Kong, Singapore, Taiwan, and South Korea have used this strategy successfully to achieve development.

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    Trade and Development PDF

    Description

    Test your knowledge on international trade concepts, including bilateral and multinational trade. This quiz covers the roles of markets and the differences in trade practices between LEDCs and MEDCs. Challenge yourself and understand the dynamics of global commerce!

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