Answer :
Smooth-Ride Inc., a U.S.-based motorcycle manufacturer, sold custom cycles to Germany. Germany paid Smooth-Ride in dollars, but in exchange, Smooth-Ride agreed to spend some of its proceeds from the sale on electronic equipment produced in Germany-The type of counter trade arrangement illustrated by the example is that of Counter Purchase.
Explanation:
Counter trade agreement refers to the agreement of exchanging goods and services of a country with the goods and services of other country either in part or whole ,rather than using money as a medium of exchange
There are basically three type of counter trade
- Barter,
- counter purchase,
- offset
Barter system :-It refers to the direct exchange of goods and services between two parties in a trade arrangement.
Counterpurchase refers to an agreement in which a exporter agrees to purchase a specific quantity of unrelated goods or services from a country in exchange of the value of the goods exported.
Offset:It refers to an additional contract to buy goods and services from the importers country
Smooth-Ride Inc., a U.S.-based motorcycle manufacturer, sold custom cycles to Germany. Germany paid Smooth-Ride in dollars, but in exchange, Smooth-Ride agreed to spend some of its proceeds from the sale on electronic equipment produced in Germany-The type of counter trade arrangement illustrated by the example is that of Counter Purchase.