5
QuizMultiple Choice

The Contemporary Global Economy — Quiz

Question 5 • Principles of American Democracy

How does international trade lead to specialization?

Answer
A
Labor can be outsourced cheaply to other countries, which brings down production costs.
B
Countries become more dependent on each other for buying and selling manufactured goods.
C
Countries can make the best use of resources by buying what they don’t have from other nations.
D
Industries begin to compete to offer the best prices and increase demand.

Explanation

International trade lets countries focus on producing goods they can make efficiently and trade for goods they lack or produce less efficiently. This allows each country to make better use of its resources, which is specialization. Choice C describes this directly; outsourcing labor in A can lower costs, but it is not the general way trade leads to specialization.

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