1) Discuss the advantages and disadvantages of international free trade. BENEFITS Increased production The reason for the exchange is to provide access to a greater variety of products and services. As the Heritage Foundation has stated, free trade promotes rivalry, pushing organizations to improve and create better products by keeping costs low and quality high. Free trade allows organizations to focus on the goods or services they know best. International trade builds market share for businesses. As a result, costs decrease and productivity increases, leading to higher production rates. Economic development Free trade involves risk-taking through an increase in sales and market share. The fact is that when developed countries like the United States exploit free trade, their economies grow. This development is flooding smaller countries, financially unstable but interested in trade. The advantage for poor countries of being able to exchange for capital is that the benefits are more immediate in their private sector. Global cooperation and free trade strengthen organizations that contribute to respecting legal standards. The World Trade Organization obliges its members to respect all agreements and comply with all decisions of the WTO. Countries that don't allow contracts lose business and investors move their money elsewhere. If a nation needs to retain the benefits of free trade, then it must comply with the guidelines. Asset Distribution Free trade improves the distribution of global assets. If countries or individuals can trade in the things they need, they can focus on making the things they do best. Imports tend to suppress inflation,...... middle of paper ...... still under fixed exchange rate the government must maintain the exchange rate and to do this it must sell its foreign assets and reserves against local assets, resulting in a reduction in the country's foreign exchange reserves. Therefore, monetary policy is ineffective with fixed exchange rates. REFERENCE: Jackson, J (1993) Basics of macro economics, Macro economies journal, 833-14Keynesian (1899) Keynesian Theory and its implication, Journal of Macro Economics, 248-95Ferguson, Brian S. (2013) General theory of employment , University of Guelph, Discussionpapers, 2013-06, 186-49Vroey, M (1994) Nash equilibrium & working, Journal of Business Economics, 208-89Jacob, B (1987) Fixed exchange rate policies, University of Cambridge, London, 293-97Walt, H (1993) Monetarist Theory and Classical Theory, McGraw Hill, London Press, London, 98-122