Multiple choice

Free trade refers to

  1. free movement of goods from one country to another

  2. movement of goods free of cost

  3. unrestricted exchange of goods and services

  4. free of duty trade
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C Correct answer
Explanation

Free trade refers to the unrestricted exchange of goods and services between countries without artificial barriers like tariffs, quotas, or import licenses. It is based on the principle of comparative advantage and promotes efficiency through competition. The term 'free' means absence of government restrictions, not that goods are cost-free or duty-free.

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