Trade and Exchange PDF

TRADE AND EXCHANGE Trade is the buying and selling of goods and services. Goods are objects that people grow or make—for example, food, clothes, and computers. Services are things that people do—for example, banking, communications, and health care. People have traded since prehistoric times. Today...

TRADE AND EXCHANGE Trade is the buying and selling of goods and services. Goods are objects that people grow or make—for example, food, clothes, and computers. Services are things that people do—for example, banking, communications, and health care. People have traded since prehistoric times. Today most countries take part in international trade, or trade across country borders.  Reasons for trade Trade happens because people need or want goods that they do not have. People also trade for services when they do not have the time or the skills to do things. Trade between countries happens for similar reasons. For example, some countries have resources, such as oil, or skills, such as car manufacturing, that other countries will buy. Both people and countries want trade to benefit them. Families want to earn more money than they spend on goods and services. Countries try to sell, or export, as much as they buy, or import, from other countries. Trade limits In some economies, the government controls all trade. In others, the government allows companies to trade more freely. However, even governments that support free trade control trade in some way. They may keep companies from trading dangerous or illegal products. They may also pass laws to prevent companies from forming monopolies. A monopoly occurs when one company has so much control over a certain type of good or service that no other companies can compete, or make money selling that good or service. Countries also limit trade between other countries and their own. Countries may charge tariffs, or special taxes, on foreign goods. They may also set quotas, or limits on the amount of foreign goods they buy. In the 1900s many countries worked to stop trade limits. Some formed trading blocs, or groups of countries that trade freely. Examples include the North American Free Trade Agreement (NAFTA), the European Union, and South America’s Mercosur. In addition, about 150 countries joined the World Trade Organization (WTO). The WTO encourages free trade around the world. The lifting of trade limits caused international trade to grow. However, some people questioned the idea of free trade. Without trade limits, they warned, international companies could pay workers poorly and pollute the environment.