Comprehension

Case for Free Trade
The act of opening up economies for trading is known as free trade or trade liberalisation. This is done by bringing down trade barriers like tariffs. Trade liberalisation allows goods and services from everywhere to compete with domestic products and services.
Globalisation along with free trade can adversely affect the economies of developing countries by not giving equal playing field by imposing conditions which are unfavourable. With the development of transport and communication systems, goods and services can travel faster and farther than ever before. But free trade should not only let rich countries enter the markets, but allow the developed countries to keep their own markets protected from foreign products. 
Countries also need to be cautious about dumped goods; as along with free trade dumped goods of cheaper prices can harm the domestic producers.

Question: 1

Which one of the following is called 'free trade'?

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Free trade = Trade liberalisation = Removal of trade barriers.
Updated On: Jul 2, 2025
  • Trade liberalisation
  • Trade restriction
  • Trade value
  • Trade quantity
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The Correct Option is A

Solution and Explanation

Free trade refers to the removal or reduction of trade barriers such as tariffs and quotas, allowing goods and services to move freely across countries. This process is known as trade liberalisation.
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Question: 2

The most adverse effect of 'free trade' is observed with which one of the following?

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Free trade often disadvantages developing countries due to unequal competition.
Updated On: Jul 2, 2025
  • Developed countries
  • Developing countries
  • Both under-developed and developed countries
  • Both developed and developing countries
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The Correct Option is B

Solution and Explanation

Developing countries often suffer the most adverse effects of free trade due to unequal competition with developed nations, which have better resources and technology. Free trade without a level playing field can hurt domestic industries in developing countries.
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Question: 3

Which one of the following is the impact of the development of transport and communication on trade?

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Better transport and communication = Faster and farther movement of goods and services.
Updated On: Jul 2, 2025
  • Goods and services travel faster
  • Goods and services move farther
  • Goods and services travel faster and move farther
  • Better connectivity only in a region concerned
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The Correct Option is C

Solution and Explanation

Advancements in transport and communication have allowed goods and services to be transported more quickly over longer distances than ever before, thus increasing the scope and speed of trade globally.
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