Advantages of Free Trade:
The advocates of free trade put forward the following advantages of free trade:
(a) International Specialization:
Free trade causes international specialisation as it enables the different countries to produce those goods in which they have comparative advantage. International trade enables countries to obtain the advantages of specialisation. First, a great variety of products may be obtained.
If there were no international trade, many countries would have to go without...
The Stolper-Samuelson Theorem:
Under the assumptions that the underlying production technology exhibits constant returns to scale and that both goods are produced, an increase in the price of one good leads to the increase in the real income of the factor that are used intensively in producing that good, and lowers the real income of the other factor. Trade results in the rising of the price of the good which uses intensivelythe abundant factor that earned relatively low in autarky. Since demand...
Financial Intermediary - An entity that acts as the middleman between two parties in a financial transaction. While a commercial bank is a typical financial intermediary, this category also includes other financial institutions such asinvestment banks, insurance companies, broker-dealers,mutual funds and pension funds. Financial intermediaries offer a number of benefits to the average consumer including safety,liquidity and economies of scale.
Primary Market - markets in which corporations raise
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