DOMESTIC TRADE composed of all business whose primary function

is to sell products in the Philippine market

FOREIGN TRADE refers to the exchange of goods and services by
the people of different countries.
THE FLOW OF RESOURCES AMONG COUNTRIES:
1. Flow of product !"d #r$%c#
- flow of products can be carried out through exporting and importing
- there is flow of services among countries by accepting job offers abroad
&. Flow of 'o"#(
- can be in the form of loans, grants or investments. It is usually the
exchange of currencies accepted in the international market.
THEORIES WH) COUNTRIES TRADE:
1. A*SOLUTE AD+ANTAGE
- introduced by dam !mith.
- a country is considered to possess absolute advantage over other
countries if it can produce more units of a particular product compared to
other countries at the same amount of resources.
&. COM,ARATI+E AD+ANTAGE
- discussed by "avid #icardo in his book, Principles of Political $conomy
and %axation &'(')*
- theory which has become the basis for the study of international
economy.
-total production of a particular country will increase if it will speciali+e in
producing a particular product. If a particular country has the capacity to
produce a particular kind of product at a lower cost of production
compared to other countries, it is more advantageous for other countries
to buy the said product from the country who produces it.
*ALANCE OF TRADE sometimes called as ,net export-
- refers to the difference between the value of
exports and imports
TRADE SUR,LUS
- the balance of trade is favorable if #-port #-c##d %'port. It means
that we are receiving more dollars and paying less for imports.
TRADE DEFICIT
- the balance of trade is unfavorable if %'port #-c##d #-port. It
means that we are paying more dollars than receiving them through our
exports.
*ALANCE OF ,A)MENTS measures inflows and outflows of for#%."
#-c/!".# &the means used for debt payment by countries with different
currencies* of a country
- it is a list of all economic
transactions of a country with other countries in terms of money at a
particular period. %he currency used is the .! dollars because this is
considered as the international monetary unit.
*O, ACCOUNT record of all economic transactions of a country. It
lists all the foreign exchange a country earns as against the foreign
exchange it spends.
COM,ONENTS OF *O,:
'. CURRENT ACCOUNT account which reflects the movement of
exports and imports of a country
- /0% 1 23I 1 Tr!"f#r of ,!('#"t
&donations paid and received from official and unofficial sources*
4. CA,ITAL ACCOUNT reflects all transactions involving investment in
the country
- record of a country5s investment
transaction with the rest of the world during a given year
6. CASH ACCOUNT through this, a country5s savings can be checked.
- consists of a country5s foreign reserves in
different currencies and gold.
*O, SUR,LUS
- /alance of payment is considered favorable if there are more foreign
exchange inflows than outflows
*O, DEFICIT
- /alance of payment is considered unfavorable if there are more foreign
exchange outflows than inflows.
0!l!"c#d *O, !ccou"t is achieved when there is e7ual
amount of foreign exchange inflows and outflows in a given
year. It is more ideal than a /0P surplus.
/0P is different from /0%. /0% is limited to trading while /0P
is wider in scope because it includes all financial transactions
of a country at any given time.
DOMESTIC TRADE composed of all business whose primary function
is to sell products in the Philippine market
FOREIGN TRADE refers to the exchange of goods and services by
the people of different countries.
THE FLOW OF RESOURCES AMONG COUNTRIES:
1. Flow of product !"d #r$%c#
- flow of products can be carried out through exporting and importing
- there is flow of services among countries by accepting job offers abroad
&. Flow of 'o"#(
- can be in the form of loans, grants or investments. It is usually the
exchange of currencies accepted in the international market.
THEORIES WH) COUNTRIES TRADE:
1. A*SOLUTE AD+ANTAGE
- introduced by dam !mith.
- a country is considered to possess absolute advantage over other
countries if it can produce more units of a particular product compared to
other countries at the same amount of resources.
&. COM,ARATI+E AD+ANTAGE
- discussed by "avid #icardo in his book, Principles of Political $conomy
and %axation &'(')*
- theory which has become the basis for the study of international
economy.
-total production of a particular country will increase if it will speciali+e in
producing a particular product. If a particular country has the capacity to
produce a particular kind of product at a lower cost of production
compared to other countries, it is more advantageous for other countries
to buy the said product from the country who produces it.
*ALANCE OF TRADE sometimes called as ,net export-
- refers to the difference between the value of
exports and imports
TRADE SUR,LUS
- the balance of trade is favorable if #-port #-c##d %'port. It means
that we are receiving more dollars and paying less for imports.
TRADE DEFICIT
- the balance of trade is unfavorable if %'port #-c##d #-port. It
means that we are paying more dollars than receiving them through our
exports.
*ALANCE OF ,A)MENTS measures inflows and outflows of for#%."
#-c/!".# &the means used for debt payment by countries with different
currencies* of a country
- it is a list of all economic
transactions of a country with other countries in terms of money at a
particular period. %he currency used is the .! dollars because this is
considered as the international monetary unit.
*O, ACCOUNT record of all economic transactions of a country. It
lists all the foreign exchange a country earns as against the foreign
exchange it spends.
COM,ONENTS OF *O,:
'. CURRENT ACCOUNT account which reflects the movement of
exports and imports of a country
- /0% 1 23I 1 Tr!"f#r of ,!('#"t
&donations paid and received from official and unofficial sources*
4. CA,ITAL ACCOUNT reflects all transactions involving investment in
the country
- record of a country5s investment
transaction with the rest of the world during a given year
6. CASH ACCOUNT through this, a country5s savings can be checked.
- consists of a country5s foreign reserves in
different currencies and gold.
*O, SUR,LUS
- /alance of payment is considered favorable if there are more foreign
exchange inflows than outflows
*O, DEFICIT
- /alance of payment is considered unfavorable if there are more foreign
exchange outflows than inflows.
0!l!"c#d *O, !ccou"t is achieved when there is e7ual
amount of foreign exchange inflows and outflows in a given
year. It is more ideal than a /0P surplus.
/0P is different from /0%. /0% is limited to trading while /0P
is wider in scope because it includes all financial transactions
of a country at any given time.