importance of international trade

international trade

the exchange of goods and services between countries

imports

goods and services bought from abroad. There is an outflow of money in exchange for goods and services.

exports

goods and services sold abroad. There is an inflow of money in exchange for goods and services.

why do countries trade

different countries have different allocations off resources. by each specialising and trading with other countries they can increase their productive potential and encourage economic growth

benefits of international trade for consumers

lower prices, better quality goods and services, greater variety of goods

benefits of international trade for producers

higher demand meaning producers may benefit from greater economies of scale, cheaper resources abroad, increased competition and efficiency, with greater market producers can specialise more,

free trade agreements

arrangement to move goods and services between countries without any restrictions

tariff

tax added to imports

quota

a maximum quantity of imports allowed

European Union

an economic and political group of countries in Europe that have free trade with each other

protectionist policy

government actions designed to restrict imports and protect domestic industries from foreign competition