Question

question 1 of 33
which statement best describes both the positive and negative effects of free trade in the modern era?
a. free trade allows businesses to reduce their labor costs but can lead to exploitation of workers in poor countries.
b. free trade reduces the prices of imported goods but makes countries more likely to adopt aggressive foreign policies.
c. free trade protects domestic workers from foreign competition but prevents businesses from accepting foreign investment.
d. free trade allows countries to be more economically independent but forces them to establish tariffs that limit economic growth.

Explanation:

• Option A: Free trade enables businesses to source labor from countries with lower costs (positive). However, in some poor countries, workers may face exploitation due to lack of strict labor regulations (negative). This option correctly captures both aspects.
• Option B: While free trade can reduce imported - goods prices (positive), there is no direct and inherent link between free trade and a country adopting aggressive foreign policies. This is an incorrect negative - effect assumption.
• Option C: Free trade actually exposes domestic workers to foreign competition rather than protecting them (incorrect positive - effect description). Also, free trade encourages foreign investment in many cases.
• Option D: Free trade promotes economic interdependence among countries, not independence (incorrect positive - effect description). And free trade typically aims to reduce tariffs, not establish them.

Answer:

A. Free trade allows businesses to reduce their labor costs but can lead to exploitation of workers in poor countries.