a) influences on net trade

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7 Terms

1
New cards

  • define the net trade balance

  • the difference between the value of revenue from exports and expenditure on imports

2
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  • state what is meant by a strong trade balance

  • state what is meant by a weak trade balance

  • value of revenue from exports > value of expenditure on imports

  • value of expenditure on imports > value of revenue from exports

3
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  • describe the effect on the net trade balance when real income increases in the UK

  • describe the effect on the net trade balance when real income increases abroad

  • higher incentive to consume nationally → higher demand for foreign imports nationally

  • weaker trade balance

+

  • higher incentive to consume abroad → higher demand for UK exports abroad

  • stronger trade balance

4
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  • describe a high exchange rate’s effect on the net trade balance

  • describe a low exchange rate’s effect on the net trade balance

  • the £ appreciates in value

  • expensive exports to foreign firms → lower demand for UK exports abroad

  • higher value of UK consumer’s money → higher incentive to export to the UK

  • weaker trade balance

+

  • the £ depreciates in value

  • cheaper exports to foreign firms → higher demand for UK exports abroad

  • lower value of UK consumer’s money → lower incentive to export to the UK

  • stronger trade balance

5
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  • describe the effect on the net trade balance when the world economy slows

  • describe the effect on the net trade balance when the world economy booms

  • lower demand for UK exports abroad

  • weaker trade balance

+

  • higher demand for UK exports abroad

  • stronger trade balance

6
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  • define protectionism

  • the practice of protecting a country’s domestic industries from foreign competition by taxing imports

7
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  • describe a low protectionism’s effect on the net trade balance

  • describe a high protectionism’s effect on the net trade balance

  • cheaper imports from foreign firms → higher demand for foreign imports nationally

  • weaker trade balance

+

  • expensive imports from foreign firms → lower demand for foreign imports nationally

  • stronger trade balance