18. National economies and international trade

18. National economies and international trade


1.      Trade surplus  

e. The value of a country’s exports exceeds its imports

2.      Trade deficit   

c. The value of a country’s imports exceeds its exports.

3.      balance of trade

d. The accounts setting out a country’s total imports and exports.

4.      balance of payments

b. The accounts setting out a country’s transactions with the rest of the world.

5.      external debt

a. Money owed by country to foreign creditors

6.      debt servicing

k. The payment of interest on debts

7.      devaluation

l. Reduction in the value of a currency.

8.      growth

f. Expansion of the economy

9.      recession

h. Contraction of the economy

10.  gross domestic product

g. The value of all goods and services produced by an economy over period(e.g. one year).

11.  gross national product

i. GDP plus other forms of income such as interest, profits and dividends received from abroad.

12.  national per capital income

j. the national income divided by the population


1.      The UK is a market economy.            TRUE/FALSE

2.      Most major industries are state-owned   TRUE/FALSE

3.      Many state-owned industries were privatized in the 1980s.  TRUE/FALSE

4.      The pound was floated in 2006.           TRUE/FALSE

5.      The UK owes several trillion pounds to the IMF.   TRUE/FALSE

6.      The UK spends nearly a quarter of its GNP on servicing external debt. TRUE/FALSE

7.      The UK has never experienced hyperinflation. TRUE/FALSE

8.      The UK has never had a trade deficit. TRUE/FALSE

9.      In 2006 the UK economy shrank slightly. TRUE/FALSE

10.  From 1990 to 2005, the UK economy experienced double-digit growth. TRUE/FALSE


1.      European farmers receive large sums of EU money in the form of subsidies.

2.      If government expenditure is higher than government income, the result is a budget deficit.

3.      If government income is higher than government expenditure, the result is a budget surplus.

4.      In a boom and bust economy periods of growth are followed by periods of recession.

5.      People who work for state-owned organizations such as public hospitals and state schools work in the public sector.

6.      People who work for privately-owned organizations work in the private sector.

7.      Payments by the government to people with little or no other income is called social security.

8.      Buildings, roads, railway lines, telephones networks and power suppliers are all part of country’s infrastructure.

9.      A limit on the amount of particular type of import is a quota.

10.  Import tariffs and quotas are types of trade barrier.

11.  The absence of trade barrier is known as free trade.

12.  Britain’s most important trade partners are France, Germany, and the USA.

13.  “The world is one big market”. This is one way of describing globalization.

14.  The world price of coffee is not fixed. It is largely controlled by market force.

15.  When a government makes something easier and less bureaucratic, this is called deregulation.

16.  One of the main ways to measure inflation is the Retail Price Index (CPI) which based on the prices of goods and services.

17.  The money people have after paying for food, housing and other necessities is called disposable income.

18.  Manufacturing, mining and oil reefing are parts of the UK’s industrial base.

19.  Oil, coal and water are natural resources.

20.  Wheat , potatoes and apples are crops.

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