Question

Which of the following is true with respect to trade?

• A. Goods flow from the country that has products in abundance to the country that has products in deficit.
• B. Goods flow from the country that has products in deficit to the country that has products in surplus.
• C. Only goods can be traded.
• D. The countries that have socialist economy restrict trade with other countries.

Answer 1

The correct option is A Goods flow from the country that has products in abundance to the country that has products in deficit.

International trade or foreign trade refers to the buying and selling of goods and services by countries. A country buys the products that it cannot produce in abundance and sells the products that it has in surplus to other countries. For example, India has a deficit of oil and Saudi Arabia has an excess of oil; hence, India buys oil from Saudi Arabia.