Definition List Part 5
CAMBRIDGE O LEVEL COMMERCE (7100)
COMPLETE DEFINITIONS NOTES — PART 5
INTERNATIONAL TRADE
International Trade
-
The exchange of goods and services between countries.
Importance:
-
Greater choice of goods
-
Earning foreign exchange
-
Access to raw materials
-
Specialisation
Visible Trade
-
Trade involving physical goods.
Examples:
-
Cars
-
Oil
-
Clothes
Invisible Trade
-
Trade involving services.
Examples:
-
Banking
-
Tourism
-
Insurance
Balance of Trade
-
Difference between value of exports and imports of visible goods.
Formula:
-
Balance of Trade = Exports − Imports
Favourable Balance of Trade
-
Situation where exports are greater than imports.
Unfavourable Balance of Trade
-
Situation where imports are greater than exports.
Balance of Payments
-
Record of all financial transactions between one country and others.
Import
-
Goods or services bought from another country.
Export
-
Goods or services sold to another country.
Tariff
-
Tax imposed on imports or exports.
Quota
-
Limit placed on quantity of imports.
Embargo
-
Official ban on trade with a country.
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.
Protectionism
-
Government actions protecting local industries from foreign competition.
Methods:
-
Tariffs
-
Quotas
-
Subsidies
Free Trade
-
International trade without restrictions.
Dumping
-
Selling goods abroad below cost price.
Customs Duty
-
Tax charged on imported goods.
Free Trade Area
-
Group of countries removing trade barriers among themselves.
Customs Union
-
Group of countries with free trade among members and common external tariffs.
Common Market
-
Customs union allowing free movement of labour and capital.
Economic Union
-
Common market with shared economic policies.
Exchange Control
-
Government restrictions on foreign currency transactions.
Foreign Exchange
-
Buying and selling currencies of different countries.
Exchange Rate
-
Value of one currency compared to another.
Appreciation
-
Increase in value of a currency.
Depreciation
-
Decrease in value of a currency.
Convertibility
-
Ability to exchange one currency for another.
Hard Currency
-
Stable and widely accepted currency.
Examples:
-
US Dollar
-
Euro
Soft Currency
-
Currency with unstable value and limited acceptance.
Letter of Credit
-
Bank guarantee ensuring payment to exporters.
Bill of Lading
-
Document proving ownership of goods transported by sea.
Certificate of Origin
-
Document stating country where goods were produced.
Consular Invoice
-
Invoice certified by importing country’s consulate.
Preferential Trade Agreement
-
Agreement reducing trade barriers between countries.
Trade Bloc
-
Group of countries trading together with fewer restrictions.
World Trade Organization (WTO)
-
International organisation regulating global trade.
International Monetary Fund (IMF)
-
Organisation promoting international monetary cooperation.
World Bank
-
International organisation providing loans for development projects.
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.
CHANNELS OF DISTRIBUTION
Channel of Distribution
-
Path through which goods move from producer to consumer.
Wholesaler
-
Trader buying goods in bulk and selling to retailers.
Retailer
-
Trader selling goods directly to consumers.
Agent
-
Person acting on behalf of another business.
Broker
-
Agent bringing buyers and sellers together.
Consumer Cooperative
-
Retail organisation owned by consumers.
Mail Order Business
-
Business selling goods without customers visiting shops.
Supermarket
-
Large self-service retail store.
Department Store
-
Large retail store divided into departments.
Chain Store
-
Group of shops owned by one company.
Hypermarket
-
Very large retail store combining supermarket and department store features.
Discount Store
-
Retailer selling goods at lower prices.
E-Commerce
-
Buying and selling through electronic systems.
Online Retailing
-
Selling goods through websites or apps.
Automatic Vending
-
Selling goods through vending machines.
Hire Purchase
-
Buying goods by paying instalments over time.
Cash and Carry
-
Wholesaling system where buyers pay cash and transport goods themselves.
Direct Selling
-
Selling directly to consumers without intermediaries.
Market Trader
-
Retailer selling goods from market stalls.
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.
CONSUMER CREDIT
Consumer Credit
-
System allowing consumers to obtain goods before full payment.
Hire Purchase
-
Buying goods through instalments while using them immediately.
Features:
-
Deposit paid first
-
Ownership transferred after final instalment
Instalment Credit
-
System of paying fixed amounts regularly over time.
Credit Sale
-
Sale where payment is delayed.
Leasing
-
Renting equipment or property for a fixed period.
Mortgage
-
Long-term loan used to buy property.
Creditworthiness
-
Ability of a person to repay debt.
Interest Rate
-
Percentage charged on borrowed money.
Debt
-
Money owed by a borrower.
Default
-
Failure to repay debt on time.
Repossession
-
Taking back goods when payments are not made.
Guarantor
-
Person agreeing to repay debt if borrower fails.
Collateral
-
Asset pledged as security for a loan.
APR (Annual Percentage Rate)
-
Total yearly cost of borrowing including interest and charges.