International trade in goods and services has increased over the last 50 years because of ______.

Select all that apply.

Question

International trade in goods and services has increased over the last 50 years because of ______.

Select all that apply.

BlackTom AI · Accepted Answer

To unpack why international trade in goods and services has expanded, consider each option in turn.
Option 1: reductions in transportation costs. This is a key factor because lower shipping and logistics expenses make cross-border trade economically viable for a wider range of products, encouraging firms to source inputs and sell outputs internationally. The cost reductions directly improve comparative advantages and widen feasible trade, so this statement is a strong contributor to the observed growth.
Option 2: reductions in the cost of telecommunication. As communication costs fall, firms can coordinate production across borders more efficiently, manage complex supply chains, and engage in real-time coordination with overseas partners. This technological progress lowers the barriers to international exchange and supports higher volumes of trade, making this option correct.
Option 3: increases in tariffs and quotas throughout the world. Higher trade barriers raise the costs of importing and exporting, discourage cross-border exchange, and can trigger retaliation, all of which tend to reduce trade flows rather than expand them. Therefore, this option is incorrect as a reason for the growth in trade over the past decades.
Option 4: enhanced global labor and environmental standards. While such standards may influence where and how trade occurs, they are not the primary driver of the broad increase in trade volumes across the 50-year horizon. They can affect comparative advantage and trade patterns, but they do not inherently explain a universal rise in trade as directly as cost reductions in transportation and communications do. Thus, this option is less directly linked and not a primary cause of the overall expansion, making it incorrect as a general explanation.

FA25 ECON 302 002 Homework #11 (International Trade)

International trade in goods and services has increased over the last 50 years because of ______. Select all that apply.

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