IGCSE Development Studies: Specimen Questions with Answers 17 - 18 of 98

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Forms of Free Trade

Question 17 (2 of 7 Based on Passage)

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Differentiate between free trade and protectionism.

Explanation

Differentiate between Free Trade and Protectionism
S. No.Free tradeProtectionism
1.The idea that countries benefit from trading with other nationsProtectionism is the idea that protecting the home market is necessary because other countries take advantage of a country.
2.The policy of trading nations without restrictions.The policy of using tariffs or quotas to restrict trade
3.The concept that a nation has an “open economy”The concept of protecting domestic workers and industries in the face of foreign competition.
It fosters efficient market mechanismIt increases international competition and efficiency
5.It strengthens absolute/comparative advantageIt allows freer movement of resources.

Question 18 (3 of 7 Based on Passage)

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Free trade is good for nations?

Explanation

The Nations Which Can Benefit from Free Trade Are

  • The exporters with competitive advantage
  • The nations having workers who gain jobs in export industries.
  • Nation having net economic welfare gain for society
  • Consumers of nations who get benefits from cheaper prices.
  • Domestic firms who see higher demand from consumers who now have more disposable income due to cheaper imports.
  • The nation whose consumers see lower prices due to the competitive pressure of trade.