Multiple Choice: The movement to free international trade is most likely to gene

Question

Multiple Choice: The movement to free international trade is most likely to generate short-term unemployment in which industries?

a.

Industries in which there are neither imports nor exports

b.

Import-competing industries

c.

Industries that sell to domestic and foreign buyers

d.

Industries that sell to only foreign buyers

a.

Industries in which there are neither imports nor exports

b.

Import-competing industries

c.

Industries that sell to domestic and foreign buyers

d.

Industries that sell to only foreign buyers

Explanation / Answer

Correct Answer is (b) Import competing industry

Movement to free international trade will facilitate the free flow of commodities and now import will increase. In this way, industry that was already competiting with imported commodity, would be driven to less favorable conditions due to free trade. It will face unemployment and fall in production due to fall in demand.

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