Question

What is trade? What are the two types of trade? State its components.

Answer 1

1. Trade is an act (or) process of buying selling or exchanging goods and services. Trade-in general is of two types. They are Internal trade and International trade.
2. Internal Trade: Trade carried on within the domestic territory of a country.
3. International trade: Trade carried on between two or more countries.
4. Exports and imports are the two components of international trade.
5. The difference between the value of exports and imports is called the balance of trade.
6. If the value of exports exceeds the value of imports trade is said to be a favorable balance of trade.
7. If the value of Imports exceeds the value of exports it is said to be an unfavorable balance of trade.
8. The value of the currency of a country depends upon the balance of trade of that country.