Q.2 (iv):- What is meant by trade? What is the difference between international and local trade?
Exchange of goods, commodities or services between people, states or countries is termed as trade. Trade means the exchange of products between regions of surplus and regions of deficiency.
The exchange of commodities between two or more countries is termed as international trade.
It may take place through sea, air or land routes.
While local trade is carried on within cities, towns or villages. Exchange of the items take place in local markets where items of local needs are catered to. Local trade mainly takes place through roads, railway or inland waterways.
Export and import are the components of international trade. When goods are traded out from a country to other countries, it is termed as export. When goods are traded and brought into a country from other countries, it is termed as import.
Export means earning of foreign exchange by the country while imports involve use of foreign exchange.
The difference between export and import of a country is termed as its balance of trade. When the value of exports exceeds the value of imports, it is called favourable balance of trade. If the value of imports exceeds the value of exports, it is termed as unfavourable balance of trade.