Question

What is meant by trade? What is the difference between international and local trade?

Answer 1

Trade

The exchange of goods among countries, states and people is referred to as trade. Trade is the movement of goods from the location where it is manufactured to the markets. The place where exchanges of goods take place is known as the market. These markets could be at local level, state level, national level or at international level or at all levels depending on the demand.

• The components of trade are imports and exports.
• The difference between a nation’s export and import is the balance of its trade.
• Unfavourable balance of trade is the situation where the value of imports are more than the value of exports.
• Favourable balance of trade is the situation where the value of exports is more than the value of imports.

International Trade

• International trade is nothing but the trade carried out between two nations.
• International trade is carried out through land, air or sea.
• Economic barometer of a country is its international trade.
• An index to the economic prosperity of a nation is its international trade.

Local Trade

• Trade carried on in villages, towns and cities is called local trade.
• Trade carried on between two or more states is called state level trade.
• Without international trade it is not possible for any country to survive as the resources are space bound.