Place we trade is called a ‘market’. For example, a fruit and vegetable market trades goods such as an apple, etc. Or, trade can refer to a baker who trades money for flour or wheat. However, we do not tend to trade because of the needs of other goods and services that we can not produce. Also, trade helps with increase of GDP, employment, incomes, wider range of choices in products, living standards and decreases inflation. We tend to trade because of the benefits we all can share around that will eventually make both side of trading relationships to gain advantages. This is called the law of comparative advantage. This principle notes that a nation should ‘specialise’ in those select areas of production in which …show more content…
The balance on trade is now located as minus, which it shows that we are spending more then we earn for sure. As we went through in 2006-07, Australia exported 215,602 (A$ million) and imported 227,836 (A$ million), leaving -12,234 (A$ million). For this annual view, 2007-08, Australia has so far exported 235,110 (A$ million) and imported 253,018 (A$ million), making the negative balance even bigger than last year, -17,908 (A$ million). From June 07 to June 08, Australia’s major trading partners are found to be China, USA, and