ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Trade is critical to America’s prosperity-fueling economic growth, supporting good jobs at home, raising living standards and helping Americans provide for their families with affordable goods and services.

Detailed explanation-2: -Trade enables countries to experience economic growth and a rising standard of living by increasing access to physical capital and export markets. However, not everyone is better off as a result of international trade.

Detailed explanation-3: -The terms of trade are mutually beneficial as long as they are between the two countries’ opportunity costs. For example, any amount of medicine greater than 1/3 and less than 1 traded for 1 cotton shirt would represent mutually beneficial terms of trade.

Detailed explanation-4: -Opportunity cost, which is reflected in the comparative advantage, is the key to international trading. We benefit from trade if we are able to obtain a good from a foreign country by giving up less than we would have to give up to obtain the good at home.