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Chapter 20: Q. 36 (page 490)

Why is trade a good thing if some people lose?

Short Answer

Expert verified

Trade is a good thing if some people lose because it benefits the economy in the long run and increases the competition in the economy.

Step by step solution

01

Step 1. Meaning of international trade.

International trade refers to the exchange of goods and services between two countries at a fixed exchange rate.

02

Step 2. Reason for trade is a good thing.

Trade is a good thing if some people lose because it benefits the economy in the long run and increases the competition in the economy. Domestic producers lose from international trade but it improves the standard of living and hence the long-term economic growth.

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Most popular questions from this chapter

If trade barriers hurt the average worker in an economy (due to lower wages), why does the government create trade barriers?

In principle, the benefits of international trade to a country exceed the costs, no matter whether the country is importing or exporting. In practice, it is not always possible to compensate the losers in a country, for example, workers who lose their jobs due to foreign imports. In your opinion, does that mean that trade should be inhibited to prevent losses?

What are some ways that governments can help people who lose from trade?

Why do you think that the GATT rounds and, more recently, WTO negotiations have become longer and more difficult to resolve?

Who does protectionism protect? From what does it protect them?
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