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: Jan 14, 2026
  • Trade liberalisation
  • Trade restriction
  • Trade value
  • Trade quantity
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The Correct Option is A

Solution and Explanation

Trade barriers, including tariffs and quotas, are eliminated or lessened under free trade, facilitating the unimpeded movement of goods and services between nations. This is termed 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: Jan 14, 2026
  • 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

Free trade disproportionately burdens developing nations, as their inherent disadvantages in resources and technology lead to unfair competition from developed countries. This imbalance, without equitable conditions, can damage domestic industries within developing economies.
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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: Jan 14, 2026
  • 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

Improved transportation and communication technologies have enabled faster, longer-distance movement of goods and services, expanding the reach and pace of global commerce.
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