Question
Define international trade. Which are two types of international trade? State one characteristic of each.
Solution
The exchange of goods and services among the countries of the world is called international trade. International trade is chiefly of two types:
1. Bilateral Trade: Trade between two countries on a regular basis is known as bilateral trade. This takes place between two countries which have certain shared preferences for goods or on the same complementary economic level.
Characteristics: It is the exchange of commodities between two countries e.g. Trade between India and U. K.
2. Multilateral Trade: In this type of trade and services exchange takes place between several countries on regular basis.
Characteristics: A country may export her commodities to a number of countries under international price, such as India export sugar to several countries.
