Theory question 105
International Trade(a) What is international trade?
(b) Explain any four advantages of international trade.
Show the model answer
Model answer
(a) International trade is the exchange of goods and services between different countries, involving different currencies.
(b) Any four: countries get goods they cannot produce; specialisation according to comparative advantage raises world output; wider market and economies of scale; earns foreign exchange; lower prices and wider choice for consumers; transfer of technology and skills; promotes international co-operation; provides employment.
Explanation
Explain each advantage, especially specialisation and comparative advantage.