The paper "Role Played By Exchange Rates in European Business" is a great example of an assignment on business. Importance of International Trade to an Open Economy Such As the UK Globalisation in the economic environment has significantly led nations to trade with each other with a minimal amount of restrictions. In the current scenario, international trade is of significance for the greater economic upsurge. Similarly, the economic condition of nations due to trade and open economy is bound to affect other nations’ economies. Contextually, with the act of globalization people are able to sell their commodity in the global market while consumers also have access to a wider range of products and services.
Additionally, with the high reliance of the economy over the others such as rapid expansion, advancement in the means of transport, and industrialization, the concept of international trading is correspondingly expanding. The concept of international trade is highly significant for the UK economy, in order to strengthen the economic position and process as the competitive global economy. Moreover, international trading allows the UK economy to effectively utilize the economic resources, import the products and services that are not produced in the nation, as well as provide wider ranges of choices to the inhabitants.
Furthermore, the other key benefits of international trading are that it allows the UK economy to induce, enhance the competitive position of the domestic economy by taking advantage of international technologies. This aspect enhances the market potentials, increases the national revenue, provides access to the global market, mitigates the economic issues, and reduces high dependency in the existing market among others1. Comparative Advantage, Absolute Advantage, and Terms of Trade and Exchange Rate Comparative Advantage David Ricardo have proposed the concept of competitive advantage, which affirms the ability of the nation, firms, or an individual to produce goods and services at a comparatively lower marginal and opportunity cost as others.
Moreover, comparative advantage allows them to trade the goods and services at a lower cost than the competitors and comprehend high sales margin2. Absolute Advantage The concept of absolute advantage is quite similar to the completive advantage, which affirms an individual, firm, or nation to produce the goods and services at a lower cost per unit using a smaller quantity of inputs compared to other competing entities (s).
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