1. Specialization
2. It leads the domestic firm achieving economic of scale
3. Variance of product choice
2. It leads the domestic firm achieving economic of scale
3. Variance of product choice
Reasons of International Trade
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1. On driving course of international trade is natural benefit between two countries.
2. Variations in the cost of production constitute incentive for international trade.
3. Local production factor is another reason of international trade which consistory available labor cost, labor, skill, tax situation.
2. Variations in the cost of production constitute incentive for international trade.
3. Local production factor is another reason of international trade which consistory available labor cost, labor, skill, tax situation.
International Trade
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In simple sense international trade means the exchange of goods and services approach the international borders.
In broad sense, international trade deals with the issues related to the exchange of goods and services, capital and factors of productions between traders approach nationals bounders on market.
There are two theory of international trade:
1. Absolute advantage theory: Absolute advantage refers to differences in productivity of nation. The ability of a country, individual company or reason to produce a good or service at a lower cost per unit then the cost at which any other country produces that good and service.
2. Comparative advantage theory: Refers to differences in opportunity cost (describes what sacrifice is when one choice is taken over another). Comparative advantage gives a company the ability to sale goods & services at a lower price than its competitor.
In broad sense, international trade deals with the issues related to the exchange of goods and services, capital and factors of productions between traders approach nationals bounders on market.
There are two theory of international trade:
1. Absolute advantage theory: Absolute advantage refers to differences in productivity of nation. The ability of a country, individual company or reason to produce a good or service at a lower cost per unit then the cost at which any other country produces that good and service.
2. Comparative advantage theory: Refers to differences in opportunity cost (describes what sacrifice is when one choice is taken over another). Comparative advantage gives a company the ability to sale goods & services at a lower price than its competitor.
The Causes of inflation
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There are various causes of inflation. The most concerning causes are –
1. Increase in cost of labor that are not liked to increase in labor productivity.
2. Increase in the cost of raw materials which put come about different stages of the economic cycle where the demand for raw material out strip supply in short terms.
3. A determination in exchange rate which trend to cost import price to raise.
1. Increase in cost of labor that are not liked to increase in labor productivity.
2. Increase in the cost of raw materials which put come about different stages of the economic cycle where the demand for raw material out strip supply in short terms.
3. A determination in exchange rate which trend to cost import price to raise.
Inflation
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Inflation may be defined as a persistent increase in price overtime. In other words the rate of inflation is measure by changes in the purchasing power of money.
There are a number of ways in which inflation can be measured one method is by measuring changes in the retail price index (RPI).
The RPI measures the change in prices from month to month in a representative busked of commodities bought by the average consumer.
The commodities in the busked are weighted differently to indicate the proportion of expenditure by the average consumer on variances items.
There are a number of ways in which inflation can be measured one method is by measuring changes in the retail price index (RPI).
The RPI measures the change in prices from month to month in a representative busked of commodities bought by the average consumer.
The commodities in the busked are weighted differently to indicate the proportion of expenditure by the average consumer on variances items.
Structural Changes in major economics
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By structural change we mean how the variance sectors in an economy have changed, it gives some broad definitions of these sectors.
- Primary Sector
- Secondary Sector
- Tertiary Sector
- Primary Sector: Primary sector includes activities directly related to natural resources. For example- Firming, mining, oil extraction and other natural resources etc.
- Secondary Sector: The secondary sector covers production industries in the economy such as manufacturing the processing of materials produced in the primary sector.
- Tertiary sector: The tertiary sector include all private sector services. For example- Banking, Finance, Computing service and Tourism. It also includes public sector services such as health care, defiance and other govt. facilities.
Factors to be consider in compering enter country GDP
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1. Large country trend to have hire total GDP. Therefore a better cooperation is GDP per head per capital.
2. GDP needs to be consider in real terms rather than nominal terms
3. GDP needs to be converted into a common currency (US dollar).
4. GDP figure can only include factors on which information is available
5. GDP figure don’t make reference to the distribution income between countries.
6. GDP figures make no reference to the social cost of production
2. GDP needs to be consider in real terms rather than nominal terms
3. GDP needs to be converted into a common currency (US dollar).
4. GDP figure can only include factors on which information is available
5. GDP figure don’t make reference to the distribution income between countries.
6. GDP figures make no reference to the social cost of production
