Read the passage and answer the questions:
Trade Liberalisation
The act of opening up economies for trading is known as free trade or trade liberalisation. This is done by bringing down trade barriers like tariffs. Trade liberalisation allows goods and services from everywhere to compete with domestic products and services.
Globalisation along with free trade can adversely affect the economies of developing countries by not giving equal playing field by imposing conditions which are unfavourable. With the development of transport and communication systems goods and services can travel faster and farther than ever before. But free trade should not only let rich countries enter the markets, but allow the developing countries to keep their own markets protected from foreign products.
Countries also need to be cautious about dumped goods; as along with free trade dumped goods of cheaper prices can harm the domestic producers.
Which one of the following is another term for free trade?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Trade liberalisation
Option (1) Economic liberalisation — Incorrect. It is a wider policy covering the whole economy, not trade alone.
Option (2) Trade liberalisation — Correct. The act of opening up economies for trading is known as free trade or trade liberalisation; the two names mean the same thing.
Option (3) Globalisation — Incorrect. The passage speaks of globalisation along with free trade, two things, not two names.
Option (4) Cultural liberalisation — Incorrect. Free trade deals with goods and services, not with culture, so this name has nothing to do with it.
NCERT (2025-26): “Case for Free Trade … The act of opening up economies for trading is known as free trade or trade liberalisation. This is done by bringing down trade barriers like tariffs. Trade liberalisation allows goods and services from everywhere to compete with domestic products and services. Case for Free Trade … Globalisation along with free trade can adversely affect the economies of developing countries by not giving equal playing field by imposing conditions which are unfavourable. With the development of transport and communication systems goods and services can travel faster and farther than ever before.…” |