Theory question 101
Foreign TradeCommerce 2 (essay)
(a) What is foreign trade?
(b) Explain four ways by which foreign trade is different from home trade.
(c) State five reasons why countries restrict foreign trade.
Show the model answer
(a) Foreign trade is the buying and selling of goods and services between countries.
(b) Any four, explained: different currencies are used; language differences; more complex documents; different laws, customs and weights and measures; higher transport costs and greater distance; goods face customs duties and restrictions; greater risks in transit.
(c) Any five: protect infant industries; prevent dumping; raise revenue; correct balance of payments deficits; conserve foreign exchange; prevent importation of harmful goods; create jobs at home; retaliation; political/strategic reasons.
Contrast foreign and home trade point by point.