An important insight of international trade theory is that when countries exchange goods and services one with the other it
A) is always beneficial to both countries.
B) is usually beneficial to both countries.
C) is typically beneficial only to the low wage trade partner country.
D) is typically harmful to the technologically lagging country.
E) tends to create unemployment in both countries.

Question

Quizplus · Accepted Answer

International trade is usually beneficial to both countries because each country can specialize in producing the goods and services they have a comparative advantage in, and then trade with other countries for goods and services they need but do not produce efficiently. This leads to increased efficiency, lower prices, and economic growth for both trading partners. However, there may be certain circumstances where one country benefits more than the other or where there are negative effects such as job displacement in certain industries.

An Important Insight of International Trade Theory Is That When