Question

According to Adam Smith, the trade between countries should happen *

1 point

a) Naturally according to the market forces

b) Under government regulation

c) Using factors that are available

d) Only when a country has an absolute advantage​

Answer 1

c) Using factors that are available

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Answer 2

According to Adam Smith, the trade between countries should happen (d) only when a country has an absolute advantage​.

Adam Smith's "The Wealth of Nations":

• The great economist Adam Smith published the book "Wealth of Nations". It was mainly to study the market structure internationally.

• According to Adam's theory, an individual benefits society in terms of self-interest.

• The economist also wrote that a country should engage in trade only when it has an absolute advantage.

• In simple words, Smith said that if one country is good at producing a product, while the other country is good at producing another product, then both the countries could benefit each other through trade.

Hence, trade should happen between nations only when a nation has an absolute advantage.