Free trade is likely to increase a country’s stock of resources and th

QUESTION

Free trade is likely to increase a country’s stock of resources and the efficiency with which it utilizes those resources.

Indicate whether the statement is true or false.

ANSWER

TRUE
Opening an economy to trade is likely to generate dynamic gains of two sorts. First, free trade might increase a country’s stock of resources as increased supplies of labor and capital from abroad become available for use within the country. Second, free trade might also increase the efficiency with which a country uses its resources.