Question

Which of the following statements is true?

a. A country that imports a substantial amount of goods and services would enjoy a higher standard of living if it reduced its imports of goods and services.

b.Free trade allows a country to specialize in the production of what it produces best, increasing both its production of goods and services and its living standard.

c. In the long run, a country’s production of goods and services and the standard of living of its citizens are independent of each other because countries have the opportunity to import goods and services.

d. Countries with the least amount of international trade tend to have the highest standard of living.

Answer 1

Option b

With the free trade, the resources used for production gets used efficiently which increase productivity thereby reducing the cost of production. When the cost of production decreases consumers can afford for goods which increases consumption and hence the economic activity thereby increasing the standard of living