Which of the followings are main basis of international trade?
(A) Differences in national resources.
(B) Direction of trade.
(C) Differences in stages of economic development.
(D) Extent of foreign investment.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A), (C) and (D) only
The main basis of international trade are the factors that create differences between countries, making exchange beneficial.
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(A) Differences in national resources → Correct. Countries differ in climate, minerals, land, labor, etc. For example, Saudi Arabia exports oil, while India exports tea and textiles.
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(B) Direction of trade → Not a basis. This refers to where trade flows (e.g., India trades more with the US than with Africa). It is an outcome, not a basis.
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(C) Differences in stages of economic development → Correct. Developed countries export capital goods and technology, while developing ones export raw materials or labor-intensive goods.
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(D) Extent of foreign investment → Correct. Investment creates production capacities that shape trade patterns (e.g., foreign companies producing goods in one country for export).