7.6 Trade and the World Economy

• The two main types of trade are international and domestic
• What is domestic trade characterized by?

  Trade within a country
• What does the term "trade" refer to?

  Exchange of goods and services
• International trade occurs across national borders.


  True
• Countries trade because of comparative advantage
• What does interdependence mean in the context of trade?

  Reliance on other countries
• What is the primary role of international organizations in global trade?

  Regulate and promote trade
• The IMF provides financial assistance to countries to stabilize their economies
• Trade blocs reduce tariffs and barriers among their members.

  True
• What does comparative advantage focus on?

  Lower opportunity costs
• Specialization under trade increases production efficiency.


  True
• Major trade patterns involve flows between North America, Europe, and Asia
• Match the trade organization with its function:

  WTO ↔️ Sets trade rules

  IMF ↔️ Provides financial assistance
• Countries engage in trade because they have comparative advantages
• Both international and domestic trade are vital for economic activity and growth
• The International Monetary Fund (IMF) supports trade through financial stability
• International organizations promote global trade by reducing trade barriers
• A country with absolute advantage can produce goods more efficiently
• Major trade patterns and agreements facilitate the exchange of goods, services, and capital
• Globalization has led to greater economic interdependence between countries
• Specialization allows countries to focus on producing goods they are best at.


  True
• Match the trade type with its definition:

  International Trade ↔️ Exchange between countries

  Domestic Trade ↔️ Exchange within a country
• The WTO resolves trade disputes between countries.


  True
• What does the World Bank fund to enhance trade capacity?

  Development projects
• Order the steps involved in trade according to economic theory:

  1️⃣ Countries specialize in production

  2️⃣ Countries engage in trade

  3️⃣ Trade leads to efficiency

  4️⃣ Trade reduces costs

  5️⃣ Countries access wider markets
• Absolute advantage means a country can produce goods more efficiently than others
• How does trade reduce production costs for countries?

  Lower input prices
• NAFTA is a regional trade bloc that reduces barriers in North America.


  True
• What is an example of international trade provided in the material?

  Exporting automobiles from Germany
• Specialization encourages countries to focus on their strengths.

  True
• Match the international organization with its key function:

  WTO ↔️ Sets rules for international trade

  IMF ↔️ Provides financial assistance

  World Bank ↔️ Funds development projects

  Trade Blocs ↔️ Form preferential trade agreements
• The World Bank enhances trade capacity through infrastructure and policy reforms.


  True
• Match the economic theory with its definition:

  Comparative Advantage ↔️ Specialize in goods with lower opportunity costs

  Absolute Advantage ↔️ Produce goods more efficiently than others
• Specialization leads to increased efficiency and productivity.


  True
• The WTO aims to promote free and fair trade among its member countries.


  True
• Globalization has shifted trade patterns, with emerging markets like China and India becoming more dominant.


  True
• Globalization has opened up new markets for businesses, allowing them to expand their customer base
• The expansion of global supply chains has contributed to environmental degradation.


  True