Which of the following problems hinder international trade? I. Political instability II. Low tariffs III. Inadequate foreign exchange IV. Strained relations

Which of the following problems hinder international trade? I. Political instability II. Low tariffs III. Inadequate foreign exchange IV. Strained relations

Answer Details

International trade can be hindered by various factors. Out of the given options, the problems that hinder international trade are political instability, inadequate foreign exchange, and strained relations. Political instability refers to a situation where a country experiences frequent changes in government, civil unrest, or violent conflicts. This can negatively impact international trade as it creates uncertainty and risks for businesses, leading to a decrease in investment and economic growth. Inadequate foreign exchange occurs when a country doesn't have enough foreign currency to pay for imports or service its foreign debt. This can result in a shortage of essential goods and services, a decrease in investment, and a decrease in economic growth. Strained relations between countries can also hinder international trade. This can occur due to various reasons such as political conflicts, trade disputes, or diplomatic tensions. When countries have strained relations, it can lead to trade barriers, reduced investments, and a decrease in economic growth. Low tariffs, on the other hand, do not necessarily hinder international trade. In fact, they can encourage international trade as they make imported goods cheaper, leading to an increase in demand for foreign goods. Therefore, the correct answer is option D - I, III and IV only.