AP Macro: International Trade

Why do nations trade? The easy answer is that nations possess different natural resources and build their industries based on their available resources. Nations develop land-intensive, labor-intensive, or capital-intensive industries—or a combination of such industries—based on their best available resources. They then trade for those products they cannot profitably produce themselves.

The benefits of international trade include a wider variety of products, greater output, greater efficiency in production, and a higher standard of living. The increased competition with foreign firms helps to deter monopolies and holds prices down in the marketplace. International connections help to promote peaceful solutions to political problems, rather than war.

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