UNIT 17: INTERNATIONAL TRADE (unit review)

• raise tax revenues for the government → be spent on healthcare and education

• tariffs raise the price of imports → reduce the demand for imports

• protect infant industries - allowing them to grow and become internationally competitive
  
  Disadvantages:

• tariffs raise the costs of imported raw materials and so can cause cost-push inflation in the economy.

1. Discuss whether imposing tariffs will benefit the domestic economy?

• International trade - the exchange of goods and services beyond national borders, including the sale of exports and imports

• Free trade - trade can take place without any forms of protection, i.e. barriers to international trade, such as restrictive quotas or tariff on imported goods.

Explain the difference between international trade and free trade.

A country can protect its domestic industries from foreign competition through:

• tariffs (taxes on imported goods),

• import quotas (strict limits on the volume of allowable imports)

• subsidies (trợ cấp) (financial government assistance given to local producers to lower their costs)

3. Identify three methods of trade protection that a country could use.

• No tariffs charged or quotas imposed on exports/ imports, so encourages international trade and cooperation.

• Consumers have greater access to better-quality goods and services, which can help to improve their standard of living.

4. Explain two benefits of free trade.

• Domestic firms can go out of business (v: phá sản) if products from foreign firms are more competitively priced and/or of better quality, which can lead to domestic unemployment.

• International trade may allow the import of harmful products, which adversely affects the economy and the well-being of a country's people.

5. Describe two disadvantages of international trade.

• The lack of scarce resources in the domestic country, e.g. Bangladesh does not have sufficient supplies of crude oil (n: dầu thô) and natural gas (n: khí đốt tự nhiên), whereas Brunei Darussalam does not have the arable (adj: có thể trồng trọt đc) land - n: đất canh tác needed to grow rice and tropical fruits, so they need to trade with other countries.

• Employment opportunities can also arise from international trade and greater volumes of output.

6. Explain two reasons why countries might decide to trade with each other.