Transcription
International trade: Countries with open economies of trade will trade with other countries. We call this international trade. Most countries decide that the value they buy from other countries equals the value that they sell to the other countries. Imports and exports: Goods sold overseas are called exports. Different countries export different goods. Goods that are bought from overseas are called imports.
Visible and invisible trade: Visible trade is the buying and selling of physical goods; for example, the sale of tea, coffee, or sugar. Invisible trade is the buying and selling of services like tourism or transport. A large amount of a nation's income is now shaped to be from services.
Benefits of international trade: International trade allows countries to achieve higher living standards and large levels of income. Some other benefits of international trade is getting goods that are not produced in the country. Countries cannot produce every good that the people need. This could be because they do not have the natural resources to do so. In order to counter this problem, countries can buy these goods from overseas. Getting goods more cheaply: Some countries produce goods in larger quantities, which allows them to sell them for cheaper prices. This could be because they have cheaper resources and are because they are specialized in that field. This allows more global sales. Selling excess products are unwanted commodities: Some countries have too much of commodities, like UAE with oil. With the global market, they can sell to other countries. Some countries produce too much of a good with less demand within the nation, which also promotes nations to sale goods globally.
Balance of payment: Balance of payments is a record of all transactions related to international trade. This account can be split into two: firstly, the current account, which is the part of the balance of payments where all exports and imports are recorded. It can be used to compare the exports and inputs and try to maintain them to an equal value. This includes the visible balance, also known as balance of trade, and the invisible balance. Next, the capital and financial accounts, which is the part of the balance of payment that records transactions related to savings and investments.
Deficits and surpluses in the current account: The difference between the value of import and export is called the current balance. There are two types of current balance: Current account deficit is when the value of imports is greater than the value of exports. This is bad since the value the government spends is more than what it earns. Current account surplus is when the value of exports is greater than the value of imports. This is good because the nation is earning more than what it is spending. So you