Question

According to the theory of comparative advantage, trade wars are _____________ for the larger country involved and _______________ for the smaller country involved.

good or bad fill in the blanks

Answer 1

A - GOOD for larger country as it will encourage the domestic market and provide unemployment , the exports will become more expensive and hence it will benefit the economy. And also the larger country has the incentives sufficient for the domestic production .

B - BAD for smaller country because for them the imports become expensive and all the commodities can not be produces at home because of lack of technique in a small country. And also the imports needed for the developmental activities become expensive and hence the development of the nation suffers.