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International Trade Finance and Foreign Exchange
Chapter One: International Trade and Foreign Exchange
21
Business
Post-Graduate
12/28/2024

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Cards

Term
Question
Definition
Answer
Term
What is international trade?
Definition
The exchange of goods and services between countries
Term
What roles do exporters and importers play in international trade?
Definition
Exporters deliver goods; importers make payments
Term
Why do countries engage in international trade?
Definition
To utilize resources more efficiently and obtain products not available domestically or at better prices
Term
What is specialization in the context of international trade?
Definition
Producing certain goods based on resource availability and quality, then trading for others
Term
How does trade increase overall economic well-being?
Definition
By providing a greater selection of goods and services at lower costs
Term
What are consumer surplus and producer surplus?
Definition
Measures of economic well-being, where consumer surplus benefits consumers and producer surplus benefits producers
Term
What is mercantilism?
Definition
An early economic philosophy advocating for exporting more than importing
Term
Who opposed mercantilism and what did they advocate?
Definition
Adam Smith; he advocated for free trade and specialization based on absolute advantage
Term
What is the concept of comparative advantage?
Definition
A country can benefit from trade by specializing in goods where it has a relative advantage, even if it has an absolute disadvantage
Term
What are trade barriers?
Definition
Measures like tariffs, quotas, and non-tariff barriers introduced by governments to protect domestic industries
Term
What is the Balance of Payments (BOP)?
Definition
A statistical statement recording a country's economic transactions with the rest of the world
Term
What does the Balance of Payments consist of?
Definition
The current account and the capital and financial account
Term
What are foreign exchange reserves?
Definition
Assets held by a central bank in foreign currencies to back liabilities and influence monetary policy
Term
What is currency convertibility?
Definition
The ease with which a country's currency can be converted into another currency
Term
What are the two types of currency convertibility?
Definition
Partial and full convertibility
Term
Since when has the Bangladesh Taka been convertible on the current account?
Definition
Since 1994
Term
What does international banking involve?
Definition
Cross-border business in any currency and local business in foreign currencies
Term
What are the four main international trade payment methods?
Definition
* Cash in Advance
* Open Account
* Documentary Collection
* Documentary Credit
Term
What role do banks play in international trade?
Definition
Facilitating payments, providing financing services, and offering risk management services
Term
True or False: Trade barriers always benefit free trade.
Definition
False
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