International economics
| English | Chinese | Pinyin |
|---|---|---|
| exchange rate/eksˈtʃeɪndʒ reɪt/ | 汇率 | huì lǜ |
| tariff/ˈtærɪf/ | 关税 | guān shuì |
| quota/ˈkwəʊtə/ | 配额 | pèi é |
| free trade/friː treɪd/ | 自由贸易 | zì yóu mào yì |
| protectionism/prəˈtekʃənɪzəm/ | 贸易保护主义 | mào yì bǎo hù zhǔ yì |
Currency changes the price abroad
- An exchange rate 汇率 is the price of one currency in terms of another.
- When a home currency becomes stronger, imported goods may become cheaper for home buyers, while the firm's exports may become more expensive for foreign buyers.
- The direction matters because the business has customers, suppliers, and costs in different currencies.
Exchange rates move even when the price tag stays perfectly still.
A stronger home currency can make imported components cheaper.
The home business needs fewer home-currency units to buy foreign currency.
Governments shape trade
- A tariff 关税 is a tax on imports. It can raise the price of imported goods.
- A quota 配额 limits the quantity of a product that can be imported.
- Governments may use barriers to protect domestic producers, raise revenue, or respond to another country's policies. Consumers may face less choice or higher prices.
What is a tariff?
A tariff can raise the price of imported products or components.
Match the trade barrier to its effect.
Both can reduce foreign competition, but they operate differently.
Trade-offs, not slogans
- Free trade 自由贸易 means fewer barriers to international exchange. It can expand choice and competition.
- Protectionism 贸易保护主义 uses barriers to favour domestic producers. It may protect jobs in one sector but raise costs for firms that need imported inputs.
- A business judgement identifies who gains, who loses, and how long the effect may last.
A bicycle-accessory exporter buys lights in dollars and sells finished kits abroad. If its home currency strengthens, imported lights may cost less, but foreign customers may find the finished kits more expensive. The manager cannot call the exchange-rate change simply “good” or “bad”.
Who may be affected by a tariff on imported components? Choose all that apply.
The direction and size of the effect differ, which is why a judgement needs stakeholders.
Write one English sentence explaining one effect of a stronger home currency on the exporter.
Example: “A stronger home currency makes imported lights cheaper, but it can make exported kits cost more for foreign customers.”
Change → stakeholder effect → response. A tariff can make an imported part more expensive, so a business may renegotiate with suppliers, redesign the product, or review its price.
Do not say a tariff always helps “the economy”. Its effect differs for domestic producers, importers, customers, and firms using imported components.