What is meant by the concept of "trade creation"? a. Increased exports and reduced imports as a result of a high-tariff policy. b. Trade based on comparative advantage that typically follows the reduction of trade barriers. c. Regional trade agreements. d. Inefficient trade that follows the establishment of a free-trade area. e. The opening up of new trading routes.

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A: The openness to trade can be defined as the ratio of the total to the GDP of the country.

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Q: 3. Factors that influence international trade World trade has grown substantially in the last 60…

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.