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Chapter 2: Problem 10

What is meant by the term trade triangle?

Short Answer

Expert verified
A trade triangle is a term in economics representing the three components of international trade: the importing country, the exporting country, and the product being traded. It's often used to assess the economic strength of a country.

Step by step solution

01

Definition

A trade triangle is a term used in economics. It refers to the three components of international trade: the importing country, the exporting country, and the product (or products) being traded.
02

Explanation

These three elements - the importing country, the exporting country, and the product being traded - form the vertices of an imaginary triangle. This concept helps in visualizing international trade flows more efficiently as it brings together all necessary components of a trade.
03

Practical Use

The trade triangle concept used by economists and investors to assess the economic health of a country. By seeing which countries are exporting or importing a particular product, they can judge the strength of a country's economy in a global context.

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Most popular questions from this chapter

What is meant by constant opportunity costs and increasing opportunity costs? Under what conditions will a country experience constant or increasing costs?

Why is it that the pre-trade production points have a bearing on comparative costs under increasingcost conditions but not under constant-cost conditions?

Identify the basic questions with which modern trade theory is concerned.

How does the comparative-cost concept relate to a nation's production possibilities frontier? Illustrate how differently shaped production possibilities frontiers give rise to different opportunity costs.

How did Smith's views on international trade differ from those of the mercantilists?
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