National Economy can be defined as a nation’s financial resources and its financial management with a view toward its production. It consists of economic agencies that take part in the production, exchange, distribution, and consumption.
Table of Contents
Example of economic activity as trade.
Trading: it is an act of buying and selling goods and services
Trade can be divided into two (i) Home trade (ii) Foreign trade
Home Trade Foreign Trade
Wholesale trade Retail trade
This is the trade which operates within a country. It can also be referred to as internal trade. This trade can be practised into two ways which are (i) Wholesales trade and (ii) Retail trade.
This involves buying of goods in large quantities from the produces and sell directly to the retailers or consumers.
The wholesaler is a trader that buys goods and sell out in large quantities.
FUNCTIONS OF WHOLESALER
- He finance the producers
- Re – brands the goods
- Speeds up production process
- Assists the producers in advertising their products
- He also give information to the producers about the market
- He borrow retailers money
- He gives goods or credits to retailers.
This is the type of trade that involves sales of goods in small quantity. Retailer is a trader that buys goods in smaller quantity from the wholesaler and sells it in bits to the final consumer.
FUNCTIONS OF A RETAILER
- He sells in bits to the final consumer
- He proves information about the market to the wholesaler
- The retailer is a link between the wholesaler and consumer
- He provides after sale services
- He gives credit facilities to the trusted consumer.
This can be referred to as the trade across border. It is the trade between nations. E.g. Trade between Nigeria and United State of America (USA), Nigeria and Europe. Foreign trade can be divided into two.
- Import trade
- Export trade
It is the trade that involves movement of goods from one country into another. E.g. movement of electronics from Japan to Nigeria.
This is the movement of goods produced in the country to the other country that lacks the product of goods. e.g. The movement of cocoa, coffee to other part of country (USA, France Etc.)
Importance of Foreign Trade
- It provides employment opportunity for people
- It makes goods available in those area/country that doesn’t produce that kind of goods
- It improves people skilfulness
- It promotes peace and unity among nations
- It encourages economy development
- It gives room for a close relationship of nations
- It increase the standard of people.
Problems Of Foreign Trade
- Language Barrier
- Currency problem of difference
- The policies of government in different countries
- Document accusation problem
- Impossition of tarrif
Solution to the problem of international Trade
- Political stability
- There should be reduction in tarrifs
- The currency exchange rate should be regulated
- Transport network should be improved
- Loan should be granted to facilities trade
- Government policies should encourage foreign trade
- Production of goods and services should be increased
- Countrys should sign treaties and peace accord/agreement.