How Does the Fair Trade System Differ from the Free

question 73

Multiple Choice

How does the fair trade system differ from the free trade system?

• A) The seller can sell product based on what the market will allow.
• B) The buyer must undergo much harsher analysis of internal company processes.
• C) The buyer and seller do not have as much freedom to agree on a price.
• D) The buyer and seller are both from countries that abide by developed-country laws and standards.

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Definitions:

Overvalued Currency

A currency whose value is higher than its actual demand or economic fundamentals justify.

Non-Performing Loan

A loan in which the borrower is in default and has not made scheduled payments of principal or interest for a certain period, typically 90 days.

FX Swaps

The simultaneous purchase and sale of a given amount of currency at two different rates.

Currency Fluctuations

Variations in the exchange rate of one currency relative to another, affecting international trade and investment.