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International Trade

In: Business and Management

Submitted By vishalr
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From a business aspect, anything that is purchased sold or exchanged across national borders or then within states, regions, and cities within a country is called a trade. Through the trading process people of the respective countries or states gain a greater choice of products or services that otherwise would not be available to them. For example let’s take a look at United States and Finland. Although United States has vast forests, they can lack a certain quality that is in demand for the country, in this case the wood- based products from Finland might be of a certain quality that fills a gap in the U.S. marketplace (2008, John J. Wild). In order to fulfill the need U.S. would either purchase, sell, or exchange goods to fulfill there demand. In the olden days trade was done in a form of barter system. This is where commodities were exchanged rather then currency. Commodities that were being exchanged had equal values and were equally desirable to both parties (indianchild.com). In the modern world, money is used for exchange and the barter system is extinct. The concept of trade is centered on the simple activity of the exchange of goods and services.

In relation to trade and world output, we must remember that world output almost always will influence the amount of international trade. If the world economic output decides to take a slump then it will cause the level of international trade to slow down. On the flip side if output increases then it will generate a larger amount of International trade (Associated Content, 2009). However, the primary reason why Trade and World Out put are closely related because when a countries economy experiences a time of recession that will cause its monetary system to lose value (Associated Content, 2009). In cases like this countries can experience higher cost for imported goods which in return make domestic products more

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