NAME: Lovely Grace J.

Rivas
Kindly research the following questions

1. What is the primary purpose of international trade?

International trade plays a significant role in the global economy by allowing countries to exchange goods and
services across borders. The primary purpose of international trade is to promote economic growth and prosperity by enabling
countries to specialize in what they do best and then trade for what they need or want.

2. What is an example of a tariff?

E xample of a tariff is the U.S. tariff on imported steel. The goal was to protect domestic steel manufacturers by
making imported steel more expensive, thereby encouraging consumers and businesses to buy American-made steel instead.

3. What is the World Trade Organization (WTO) responsible for?

The World Trade Organization (WTO) is responsible for overseeing international trade rules and ensuring that trade
flows smoothly, predictably, and freely between countries.

4. What are the countries that is part of the European Union (EU)?
the European Union (EU) consists of 27 member countries. These countries are Austria. Belgium,Bulgaria, Croatia,
Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,
Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden. These countries cooperate on
various issues, including trade, agriculture, environmental policy, and foreign relations, aiming to promote peace, stability, and
prosperity within Europe.

5. What is a "free trade agreement"?

A free trade agreement (FTA) is a pact between two or more countries that aims to reduce or eliminate barriers to
trade, such as tariffs, quotas, and import/export restrictions, to encourage the exchange of goods and services between them.
The goal of an FTA is to make it easier and less costly for countries to trade with one another, promoting economic growth,
competition, and cooperation.

6. What is the main purpose of the International Monetary Fund (IMF)?

The main purpose of the International Monetary Fund (IMF) is to promote global financial stability and economic
growth. It does this by providing financial assistance, policy advice, and technical support to countries facing economic
challenges.

7. What is a non-tariff barrier to trade?

A non-tariff barrier to trade (NTB) refers to any policy or regulation, other than tariffs (taxes on imports), that countries
use to restrict or control international trade. Non-tariff barriers can be just as effective at restricting trade as tariffs, and they are
often seen as more subtle ways for countries to protect domestic industries or achieve other economic or political goals.

8. What describes a “trade deficit”?

A trade deficit occurs when a country imports more goods and services than it exports. In other words, it buys more
from other countries than it sells to them. This results in a negative balance of trade. A trade deficit can indicate that a country is
consuming more than it produces domestically, relying on imports to meet demand.

9. What is the main objective of protectionism?

The main objective of protectionism is to shield a country’s domestic industries from foreign competition. Protectionist
policies are implemented to help local businesses grow, preserve jobs, and protect critical sectors of the economy from being
undermined by cheaper or more competitive foreign goods and services. protectionism seeks to promote national economic
growth, safeguard jobs, and support local industries, though it can also lead to higher prices for consumers and potential trade
disputes with other countries.

10. What is autarky?

Autarky refers to a situation where a country or economy seeks to be self-sufficient and does not engage in
international trade. In an autarkic system, a country produces everything it needs domestically, without relying on imports or
exports. This means the country does not depend on foreign goods, services, or resources to meet its needs.
11. What characterizes a multinational corporation (MNC)?
A multinational corporation (MNC) is a company that operates in multiple countries, often with facilities, assets, and
operations spread across various regions of the world. MNCs typically have their headquarters in one country, but their business
activities, such as manufacturing, marketing, and sales, extend to other countries, making them influential players in the global
economy.

12. What is the main advantage of a country devaluing its currency?

The main advantage of a country devaluing its currency is that it can make its exports cheaper and more competitive in
the global market. When a country's currency loses value relative to other currencies, the cost of its goods and services becomes
lower for foreign buyers, boosting demand for exports.

13. What is a "trade bloc"?

A trade bloc is a group of countries that have formed an agreement to reduce or eliminate trade barriers such as tariffs,
quotas, and other restrictions among themselves, to promote free trade and economic cooperation. However, they can also
create trade diversion, where trade shifts away from more efficient producers outside the bloc to less efficient ones inside the
bloc.

14. What is "economic integration"?

Economic integration refers to the process by which countries reduce or eliminate barriers to trade, investment, and
movement of people, creating closer economic ties and collaboration between them. However, it can also lead to challenges like
trade diversion or economic dependence on a small group of countries.

15. What is the main function of the WTO?

The main function of the World Trade Organization (WTO) is to promote and regulate international trade by establishing
rules and agreements that help ensure smooth and predictable trading relationships between countries.

16. What is a "currency peg"?

A currency peg is a policy in which a country's government or central bank fixes the value of its currency to another
currency, a basket of currencies, or a commodity like gold.

17. What is a key criticism of globalization?

A key criticism of globalization is that it can exacerbate income inequality both within and between countries. While
globalization has led to economic growth, increased trade, and lower prices for consumers, it has also contributed to a widening
gap between the wealthy and the poor.

18. What is the objective of the General Agreement on Tariffs and Trade (GATT)?
The objective of the General Agreement on Tariffs and Trade (GATT), The goal was to create a more open and predictable
global trading system that would encourage economic growth, enhance global prosperity, and reduce the likelihood of trade
wars.

19. Which trade theory suggests tariffs should protect new industries?
The trade theory that suggests tariffs should protect new industries is known as the Infant Industry Argument. This
theory argues that emerging industries in a country may need temporary protection from foreign competition in order to grow,
develop, and become competitive on a global scale.

20. What does the "Heckscher-Ohlin model" emphasize?

The Heckscher-Ohlin model (H-O model) emphasizes the role of a country's factor endowments such as labor, capital,
and land in determining its comparative advantage in producing goods and services.

21. What is the role of Foreign Direct Investment (FDI)?

Foreign Direct Investment (FDI) plays a crucial role in the global economy by promoting economic growth, creating jobs,
and enhancing development in both the investing and receiving countries. It refers to investments made by a company or
individual in one country in business interests in another country. FDI plays a pivotal role in driving development, improving the
global business environment, and increasing economic connectivity between countries.
22. What characterizes a "trade surplus"?
A trade surplus occurs when a country's exports of goods and services exceed its imports, meaning the value of what it
sells abroad is greater than the value of what it buys from other countries. This results in a positive balance of trade.

23. What is the primary focus of international marketing management?

The primary focus of international marketing management is to develop and implement marketing strategies that
effectively target customers in multiple countries and regions, considering the differences in local markets, cultures, legal
regulations, and economic conditions. It involves adapting marketing practices to global environments while maintaining the
brand's core identity.

24. What is NOT a disadvantage of Foreign Direct Investment (FDI)?

A disadvantage of Foreign Direct Investment (FDI) typically refers to the potential negative effects FDI might have on the
host country, one thing NOT considered a disadvantage of FDI is: Job Creation and Economic Growth: FDI typically brings capital,
creates jobs, and boosts economic growth in the host country. These are usually viewed as advantages, as they contribute to
higher income levels, improved standards of living, and increased employment opportunities in the host economy.So, job
creation and economic growth are generally regarded as benefits, not disadvantages, of FDI.

25. What is the "terms of trade"?

The terms of trade (TOT) refers to the ratio at which one country's exports are traded for imports from another country. It
measures the relative prices of a country's exports compared to its imports. In other words, it indicates how much of a country's
imports it can purchase per unit of export goods. the terms of trade is a measure of how favorable trade conditions are for a
country, based on the relative prices of its exports and imports.

26. What does the "Balance of Payments" include?

The Balance of Payments (BOP) is a financial record that summarizes all of a country’s economic transactions with the
rest of the world over a specific period, usually a year or a quarter. It includes both the current account and the capital and
financial account, reflecting the inflows and outflows of goods, services, income, and financial assets. The Balance of Payments
includes all transactions a country makes with the rest of the world in terms of trade, investment, and financial flows.

27. Why do governments impose tariffs on imports?

Governments impose tariffs on imports for several key reasons, primarily related to protecting domestic industries and
influencing trade balances. While tariffs can offer short-term benefits, they also have downsides, such as raising the cost of
goods for consumers, reducing the overall efficiency of the economy, and potentially leading to trade wars with other countries.

28. What is an example of a "subsidy" in international trade?

A subsidy in international trade refers to a financial assistance provided by a government to domestic producers to help
them compete with foreign imports, lower the cost of their goods, or encourage certain economic activities. Subsidies can take
various forms, such as direct cash payments, tax breaks, or grants. Example of a Subsidy: Agricultural Subsidies: One of the most
common examples of subsidies is in the agricultural sector. Many countries provide subsidies to farmers to help them produce
crops more cheaply.

29. What is the characteristic of the "product life cycle" theory of international trade?
The Product Life Cycle (PLC) theory of international trade, developed by economist Raymond Vernon in the 1960s,
suggests that a product goes through different stages of development and market presence, and that its production and trade
patterns change as the product moves through these stages.

30. What is the focus of the "trade creation" effect in economic integration?
The "trade creation" effect in economic integration refers to the increase in trade between countries that occurs when
barriers to trade (such as tariffs and quotas) are reduced or eliminated as part of a trade agreement or regional economic
integration. This effect happens when countries within an economic bloc start to trade more with each other, rather than relying
on trade with countries outside the bloc, due to the removal of trade barriers.