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Definition of terms in Economics

(i) Domestic Trade:
Is the exchange of goods and services among residents of a country. It is only carried out within the national boundary.

(ii) International Trade:
It is a trade that involves the exchange of goods and services between one country and another. It takes place across national boundaries.

(iii) The Theory of Comparative Cost Advantage:
States that the total output of goods and services would increase if countries specialised in producing those commodities in which they had the greatest comparative cost advantage over other countries.

(iv) Commodity Terms of Trade:
This is the rate at which a country’s exports are exchanged for imports in their international market.

(v) Commercial Policy:
This refers to the sum total of actions that a country undertakes to deliberately influence trade in goods and services.

(vi) Economic Integration:
This is the association of countries, with common interest, to remove trade barriers that affect the flow of goods and services across their borders.

(vii) The New International Economic Order:
This is a call for fairer treatment of developing countries in the world trading system.

(viii) Globalisation of Trade:
Is a new economic effort to solve world’s trade problems by integrating countries worldwide into one large family. This offers enormous potential to improve trade among nation states.