Specialization
What is specialization in trade?
Specialization means focusing on producing a specific good or service more efficiently than others.
What is a tariff?
A tariff is a tax that a government places on imported goods.
Why is currency exchange important in international trade?
Currency exchange is important because it allows countries to trade using different currencies.
Give an example of a country that specializes in technology.
Japan specializes in advanced technology, such as cars and electronics.
How does a quota work in international trade?
A quota is a limit on the number or amount of goods that can be imported into a country.
What is an exchange rate?
An exchange rate tells how much one currency is worth in relation to another currency.
Why does specialization encourage countries to trade?
Specialization encourages trade because countries want to exchange what they can produce efficiently for what they cannot produce as efficiently.
Describe an embargo.
An embargo is a complete ban on trade with a particular country.
What happens if there is no system for exchanging currencies?
Without a system for exchanging currencies, it would be very difficult to conduct international trade.
How does specialization affect the quality of products?
Specialization can lead to higher quality products because countries become better at making specific goods.
Compare tariffs and quotas.
Tariffs increase the price of imported goods, while quotas limit the number of goods that can be traded.
Name a market where currencies are bought and sold.
The foreign exchange market (Forex) is where currencies are bought and sold.
Name two countries that specialize in producing low-cost goods and one specialization for each.
China specializes in producing low-cost goods like toys and clothing; India specializes in providing services like information technology.
Explain how trade barriers can impact consumers.
Trade barriers can make imported goods more expensive or limit their availability, which may lead consumers to buy more domestic products.
How can economic conditions affect currency exchange rates?
Economic conditions can affect supply and demand for currencies, which can change the exchange rates.