F A Vocabulary

Match the words and phrases with the definitions.

balance of trade

imports

wide range

trading partnerships

value for money

deficit

insurance

flow

the movement of something, like water in a river

big variety

financial protection

I when you receive less money than you pay out

when something is worth the amount you pay for it

the difference between the total amount of exports and imports for a country in one year

people, companies or countries that do business together

goods and services a country buys from abroad

JdC

The open economy

All through history, people t'rom one society have heen trading with people from another. Three thousand years ago, lor example, the Phoenicians ol' tlu Mediterranean built an economy almost completely on foreign trade. In tile jargon of economics, tin.' Phoenicians had an оn economy, and almost every economy since theirs has been open too.

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When;tn economy is open, this basically means that it imports and exports goods and services. What are the benefits of doing this? f irst of all. if you trade with other economies, you can import goods that do not exist in your economy. These may Iv products that your economy cannot manufacture, but they may also 1ч- raw materials. With a wider range of raw materials, an economy is able to use its capital and labour to produce a wider range of products. In this way. importing can actually help an economy grow. What's пюп.. if you allow imports from other countries, then you will have trailing partnerships I bis means that yon can export to countries. If you have customers all over the world, your economy will grow faster.

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< >pen economies arc goi*! tor consumers. too. If the economy allows imports from abroad, there will be a greater variety ot goods available locally. When products are available locally, imports of the same pnnhicts should help to keep prices down and quality high This is Itecause local companies will have to compete with foreign companies, and more competition will mean better quality and greater value for money.

Economists descriln- imports and exports of material products as -visible - because you can really see and touch them Examples of visible exports and imports are food stuffs, furniture and electronic equipment. However, there are also invisible lni|>orts and exports These are mainly services, but ean include all sorts of things. 1- xamples of invisible exports and imp >rts include banking services, insurance products, educational courses and tourism.

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