Apr 19, 2016

Finance English practice: Unit 43 — International Trade

17 cards
, 54 answers
  • Complete the sentences below. Use the key words if necessary.
    • Trade

      key words
      free trade      ○      comparative cost principle      ○      living standards      ○      productivity      ○      absolute advantage      ○      comparative advantage      ○      economies of scale


      Most economics believe in — that people and companies should be able to buy goods from all countries, without any barriers when they cross frontiers.

      The is that countries should produce whatever they can make the most cheaply. Countries will raise their and income if they specialize in the production of the goods and services in which they have the highest relative — the amount of output produced per unit of an input (e.g. raw material, labour).

      Countries can have an — so that they are the cheapest in the world, or a — so that they are only more efficient than some other countries in producing certain goods or services. This can be because they have raw materials, a particular climate, qualified labour (skilled workers), and — reduced production costs because of large-scale production.

      Balance of payments

      key words
      Imports      ○      Exports      ○      positive balance of trade      ○      trade surplus      ○      negative balance of trade      ○      trade deficit      ○      visible      ○      invisible      ○      balance of payments


      are goods or services bought from a foreign country. are goods or services sold to a foreign country.

      A country that exports more goods than it imports has a or a . The opposite is a or a . Trade in goods is sometimes called trade. Services such as banking, insurance and tourism are sometimes called imports and exports. Adding invisibles to the balance of trade gives a country’s .

      Protectionism

      key words
      protect      ○      strategic industries      ○      tariffs      ○      World Trade Organization      ○      quotas      ○      dumping


      Governments, unlike most economists, often want to various areas of the economy. These include agriculture — so that the country is certain to have food — and other that would be necessary if there was a war and international trade became impossible. Governments also want to protect other industries that provide a lot of jobs.

      Many governments impose or import taxes on goods from abroad, to make them more expensive and to encourage people to buy local products instead. However, there are an increasing number of free trade areas, without any import tariffs, in Europe, Asia, Africa and the Americas.

      The (WTO) tries to encourage free trade and reduce protectionism: restricting imports in order to help local products. According to the WTO agreement, countries have to offer the same conditions to all trading partners. The only way a country is allowed to try to restrict imports is by imposing tariffs. Countries should not use import — limits to the number of products which can be imported — or other restrictive measures. Various international agreements also forbid — selling goods abroad at below cost price in order to destroy or weaken competitors or to earn foreign currency to pay for necessary imports.

    • British English or American English?
      • visible trade
        • British English
        • American English

      • merchandise trade
        • American English
        • British English

    • Complete the sentences.
      • 1. Countries that export a lot of oil or manufactured goods tend to have a positive  . . . 
        balance of trade
        .
        • balance of trade
        • balance of payments

      • 2. A country exporting more than it imports has a trade  . . . 
        surplus
        .
        • deficit
        • surplus

      • 3. In a free trade area, governments cannot impose a  . . . 
        tariff
        on imports.
        • tariff
        • discount

      • 4. A limit to the quantity of goods that can be imported is a  . . . 
        quota
        .
        • agreement
        • quota

      • 5. Adding trade in services to trade in goods gives you the  . . . 
        balance of payments
        .
        • balance of trade
        • balance of payments

      • 6. Billions of dollars leave the USA every year because the country has a big trade  . . . 
        deficit
        .
        • deficit
        • defect

      • 7. Attempting to reduce imports in favour of local production is called  . . . 
        protectionism
        .
        • free trade
        • protectionism

      • 8. The import and export of goods is called  . . . 
        visible
        trade.
        • invisible
        • visible

      • 9. Producing in large quantities becomes cheaper because of economies of  . . . 
        scale
        .
        • scale
        • size

      • 10. If a country can produce something more cheaply than anywhere else in the world it has an  . . . 
        absolute advantage
        .
        • absolute advantage
        • comparative advantage

      • 11. Many economists encourage governments to abolish import taxes and have completely  . . . 
        free trade
        .
        • free trade
        • protectionism

      • 12. A number of international agreements make it illegal to  . . . 
        dump
        goods on foreign markets at a price that doesn’t give a profit.
        • dump
        • put on

      • 13. The comparative  . . . 
        cost
        principle is that countries should make the things they can produce the most cheaply.
        • price
        • cost

      • 14. The  . . . 
        WTO
        has established rules of trade between nations.
        • NATO
        • WTO

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