Grade 10 Business Studies – International Trade (18 Lessons) Quiz

An export is a good or service produced domestically and sold to foreign buyers. For Kenya, tea and horticultural products sold abroad are examples of exports.

Kenya earns foreign exchange from exporting tea, flowers and vegetables. Imported petrol and domestic services are not export earners.

Balance of trade equals exports minus imports of goods. A positive value is a trade surplus; a negative value is a trade deficit.

A tariff is a tax charged on imports to raise revenue or protect local industries by making imported goods more expensive.

A quota restricts the volume of a specific imported good, helping protect domestic producers from foreign competition.

Comparative advantage means focusing on goods a country produces relatively more efficiently (lower opportunity cost), which guides beneficial trade even if another country is absolutely better at everything.

The WTO sets rules for trade, facilitates negotiations, and provides a dispute settlement mechanism for members.

EAC is the East African Community, a regional bloc including Kenya that promotes trade and economic integration among member states.

AfCFTA aims to increase intra-African trade by reducing tariffs and non-tariff barriers, creating a larger market for African producers.

Depreciation lowers the foreign-currency price of Kenyan goods, making exports more attractive; when converted back to shillings exporters usually earn more.

A trade deficit occurs when the value of imports is greater than exports. Kenya often tracks this to manage external balances.

Non-tariff barriers include regulations like SPS standards which can restrict trade without using taxes or quotas.

Dumping involves pricing exports below fair market value to gain market share; countries may impose anti-dumping duties to protect local industries.

A bill of lading is issued by carriers to exporters; it evidences the contract of carriage and ownership of the goods during shipment.

FDI involves lasting interest and control (like opening a factory). It brings capital, technology and jobs into Kenya.

The balance of payments records transactions in the current account (trade in goods/services, income, transfers) and financial account (investments, loans).

Subsidies help domestic firms compete internationally by reducing their costs, encouraging production and exports.

Protectionism (tariffs, quotas) shields domestic firms and employment, though it may increase consumer prices and reduce efficiency.

Tariffs add to the cost of imports, which often passes to consumers as higher prices; this protects local producers but can reduce consumer welfare.

Customs at ports inspect shipments, assess and collect duties, and ensure compliance with trade laws, which is vital for Kenya's trade operations.

The Port of Mombasa is Kenya's primary seaport and a key gateway for imports and exports in East Africa.

Trade blocs like the EAC reduce barriers among members, enabling Kenyan businesses to sell to more customers and benefit from economies of scale.

Terms of trade measure how many imports a country can buy per unit of exports; improving terms means exports buy more imports.

Bilateral agreements are negotiated by two parties, while multilateral agreements include many countries, such as AfCFTA which involves many African states.

Import substitution aims to develop domestic industries so that imports are reduced, promoting self-sufficiency but sometimes reducing competitiveness.

International trade involves the cross-border exchange of goods and services between countries, for example Kenyan tea exported to the United Kingdom.

Tariffs are taxes on imports that raise the cost of foreign goods, helping protect local Kenyan producers from cheaper foreign competition and raising government revenue.

KRA is responsible for collecting customs duties and taxes on imports and exports to ensure compliance with Kenya's tax and customs laws.

A quota restricts the amount of a specific product that may enter a country, protecting domestic producers by limiting foreign supply.

Subsidies reduce producers' costs so local firms (for example Kenyan farmers) can compete better with imported goods or increase exports.

Regional agreements such as the EAC aim to lower tariffs and simplify trade rules so member countries like Kenya, Uganda and Tanzania can trade more easily with each other.

Dumping is when a producer sells goods abroad at unfairly low prices to drive out local competitors; governments may impose antidumping duties to protect domestic industries.

The WTO sets global trade rules and operates a dispute settlement system for trade disagreements between member countries.

When the shilling weakens, foreign buyers can purchase Kenyan goods more cheaply in their currencies, often boosting export demand.

A trade deficit occurs when the value of imports exceeds the value of exports, meaning more money is spent on foreign goods than earned from exports.

Certificates of origin prove a product's country of manufacture and help determine if it qualifies for reduced tariffs under trade agreements.

Non-tariff barriers include rules like technical standards and certification requirements that can restrict imports even when no tariff is charged.

Governments support exporters by offering incentives (tax relief, grants, training) that lower costs and help firms reach foreign markets.

The central bank manages the country's foreign currency reserves and policies that influence the exchange rate, affecting trade competitiveness.

Membership in the EAC gives Kenyan firms access to a wider market (other member states), increasing sales opportunities and economies of scale.

The balance of payments includes exports, imports, capital flows, and other international transactions showing how the country trades with the world.

FDI involves investors setting up factories, offices or buying controlling stakes abroad, such as an international firm opening a factory in Kenya.

KEBS sets and enforces product standards so Kenyan exports meet the quality and safety requirements of importing countries, helping market access.

Trade barriers restrict supply or add costs to imports, which generally leads to higher consumer prices and fewer choices in the market.

Preferential trade agreements reduce tariffs for members on agreed products to encourage trade between signatory countries.

The Import Declaration Form (IDF) is submitted to the Kenya Revenue Authority to declare imports and is required for customs clearance.

Devaluation reduces the currency value relative to others, so domestic goods cost less abroad, potentially increasing exports though it can raise import costs.

Trade liberalization lowers barriers like tariffs and quotas so that goods and services can move more freely between countries, encouraging competition and growth.

The World Bank finances infrastructure and development projects that enhance trade capacity, such as improving Kenyan roads and port facilities for exports.

Small farmers who meet quality and safety standards can sell to international buyers, enlarging markets and potentially earning better prices for crops like tea or horticulture.

An export is a product or service produced in one country and sold to customers in another—Kenyan tea sold to Europe is an export.

Balance of trade measures exports minus imports; a surplus means exports exceed imports, a deficit means imports exceed exports.

Tariffs are taxes on imports that raise their price, helping domestic producers compete with foreign suppliers.

A quota restricts the amount of a particular good that can enter a country, protecting local producers from too much foreign competition.

Subsidies help local firms produce more cheaply, making their goods more competitive both at home and abroad.

The WTO sets rules for trade, settles disputes, and helps reduce trade barriers among member nations.

The EAC aims to deepen economic cooperation, remove trade barriers and boost trade among member states such as Kenya, Uganda and Tanzania.

AfCFTA lowers trade barriers among African countries, giving Kenyan firms access to larger markets for their goods and services.

A trade deficit means a country is buying more from abroad than it sells, which may require borrowing or using reserves to finance the difference.

A weaker shilling lowers local currency price of exports for foreign buyers, but raises the shilling cost of dollar-priced imports.

Comparative advantage occurs when a country sacrifices less of other goods to produce one good, which forms the basis for mutually beneficial trade.

Protectionism uses tariffs, quotas and other measures to shield domestic firms from foreign competition.

KRA handles tax collection, including customs duties and value added tax on imports at points like the Port of Mombasa.

Non-tariff barriers include rules, standards or procedures that make importing difficult, such as tough health or safety requirements.

Dumping can harm local industries, and governments may respond with anti-dumping duties to protect domestic producers.

A bill of lading is proof of shipment and is required for clearing goods at customs and for payment in international trade.

Banks issue letters of credit to reduce payment risk; exporters are paid when they present required shipping documents.

Ad valorem tariffs are proportional to the import's declared value (for example, 10% of the invoice price).

Specific tariffs charge a set amount per unit imported, for example KES 100 per imported shoe.

FTAs lower trade barriers between member countries, increasing competition and often reducing prices for consumers.

An embargo is a complete restriction of trade with a country, usually for political reasons.

EPZs provide incentives like tax breaks and simplified regulations to boost exports and create jobs.

The current account records trade in goods and services, net income (like wages and dividends) and unilateral transfers (like remittances).

Improved terms of trade mean a country can buy more imports for a given amount of exports; it compares prices received and paid.

Depreciation makes foreign-currency-priced imports cost more in local currency, raising the import bill unless volumes fall.