Question

What is the basic function of foreign trade?

• A. It connects markets of two countries only.
• B. It creates opportunities for only the buyer to approach foreign goods.
• C. It connects markets of different countries.
• D. Foreign trade connects developed countries only.

Answer 1

Answer: (C)

It connects markets of different countries.

In general, with the opening of trade, goods travel from one market to another. Choice of goods in the markets rises. Prices of similar goods in the two markets tend to become equal.
And, producers in the two countries now closely compete against each other even though they are separated by thousands of miles! Foreign trade thus results in connecting the markets or integration of markets in different countries.