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Explain the meaning and significance in each of the following terms as used of the following terms as used in foreign trade. (i)Terms of trade, (ii)balance...

      

Explain the meaning and significance in each of the following terms as used of the following
terms as used in foreign trade.
i)Terms of trade,
ii)balance of payment,
iiiexchange rate,
iv)balance of trade
v) common market.

  

Answers


Davis
i)Terms of trade: the rate at which exports on one country
exchanges with imports. ToT = Price index of exports
determines whether the trade between one country and another is
favorable.
ii)Balance of payment: the difference between both capital and
current exports and imports of a country. If the value of exports
is higher, the country experiences a surplus and vice versa. It
determines whether a country is experiencing surplus in I
iii)Exchange rate: rate at which a country’s currency exchanges
with another. This rate determines the value of exports and
imports/ shows its indication of a country’s economic strength.
v)Balance trade: the difference between the value of a country’s
visible tangible imports and its value of exports is higher than
imports.
vi)Determines whether a country is experiencing surplus/ deficit
trade
v)Common market: an agreement between countries that allow
free movement of goods and factors of production. This allows
mobilization of resources/ trade without restriction
Githiari answered the question on September 22, 2017 at 20:05


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