What is the effect of foreign trade on markets?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. It leads to a greater integration of markets.
Foreign trade connects producers, consumers, and markets across different countries, leading to greater market integration. It allows goods, services, technology, and capital to flow freely across borders, enabling nations to specialise in what they produce best. This global exchange increases competition, improves product quality, and gives consumers access to a wider variety of goods at better prices. Rather than isolating markets, foreign trade creates interdependence among economies and promotes global economic growth through cooperation and exchange.