1a) Advantages of international free trade1. Increase production. International free trade allows countries to specialize or focus on the production of goods in which they have a comparative advantage. Specialized countries can benefit from efficiency gains generated by increased production and trade economies. The market size of the company is increased by international trade, which leads to lower average costs and higher productivity, as this ultimately leads to increased production.2. Production efficiency. The efficiency of resource allocation is improved by international free trade, as higher productivity and increased total national production of commodities and services are driven by more efficient use of resources. resources. Increased competition promotes the use of new technologies, innovative production methods, marketing and distribution methods.3. Foreign exchange gains. When a country sells exports abroad, it receives hard currency from other countries purchasing the goods. When the country gets money from selling its exports abroad, it uses it again to pay for imports such as electrical equipment and cars that are produced more cheaply abroad.4. Economic growth. More competitive industries, increased productivity, efficiency and production levels create increased living standards, higher economic growth rates and increased real incomes for countries involved in a free experiment. -international exchange.5. Benefits for consumers. Consumers have an advantage in the national economy because they can now obtain a variety of goods and services. Increased competition secures goods and services. As inputs are also supplied at the lowest prices... middle of paper... ever, this will represent a loss of monetary policy independence for at least one of the two countries. References: 1. Aldela, I. (2014). Formation and effectiveness of monetary policy at fixed exchange rates. [ONLINE] Available at: http://www.academia.edu/3594137/Monetary_policy_formation_and_effectiveness_under_fixed_exchange_rates. [Accessed April 19, 2014].2. Begg, D and Ward, D (2009). Economics for businesses. Third edition. Berkshire. McGraw-Hill.3. Charles Sturt University. (2014). Free trade and protection: advantages and disadvantages of free trade. [ONLINE] Available at: http://www.hsc.csu.edu.au/economys/global_economy/tut7/Tutorial7.html. [Accessed April 19, 2014].4. Council for Economic Education (2014). TAX AND MONETARY POLICY PROCESS. Available at: http://www.econedlink.org/lessons/index.php?lid=352&type=student [Accessed April 17 2014].