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Chapter 10: Q 35. (page 267)

If countries reduced trade barriers, would the

international flows of money increase?

Short Answer

Expert verified

Yes, this is true.

Step by step solution

01

Step 1. Definition

Trade barriers are defined as the restrictions on international trade imposed by the government. This is a protectionist approach to the economy in order to help domestic producers.

02

Step 2. 

When a country reduces its trade barriers the flow of money internationally increases.

When trade barriers are reduced, there will be more international trade in goods and services. The international flow of payments increases, and the international flow of financial investments (going in the opposite direction of the trade flow) also increases.

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