Economics Paper 2, May/June 2011  
Questions: 1 2 3 4 5 6 7 8 9 10 11 12 Main
General Comments

Question 5
  1. What is international trade?
  2. Explain any four advantages of international trade.



The question was very popular with the candidates and performance was high and quite encouraging. Candidates were able to state what international trade is as well as explain the advantages of international trade.  The following are some of the points mentioned by the candidates:

(a)      International trade is the exchange of goods and services among countries.
(b)     Advantages of international trade.

(i)  increase in the total world output of goods and services.  According to the principle of comparative cost advantage, countries would specialize and use their resources more effectively;
(ii) greater variety:  The people of one country can import and therefore enjoy what they cannot produce themselves;
(iii) a source of foreign exchange earnings;
(iv) it leads to the exchange of skills and technology;
(v) it opens up the world market for local producers;
(vi) it generates employment for those engaged in international trade;
(vii) it leads to various forms of co-operation among countries;
(viii) it is a source of revenue to the government;
(ix) it is a source of income to traders

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