Which of the following best describes the difference between global trade and domestic trade?

• A. Global trade involves the exchange of goods and services between countries, while domestic trade occurs within a single country's borders.
• B. Global trade only refers to the exchange of raw materials, whereas domestic trade involves finished goods.
• C. Global trade is regulated by local governments, while domestic trade is regulated by international organizations.
• D. Global trade does not require transportation, but domestic trade does.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the definitions of global trade and domestic trade. Global trade refers to the exchange of goods and services across international borders, involving multiple countries. Domestic trade, on the other hand, occurs within the boundaries of a single country.
2. Step 2: Identify the key characteristic that distinguishes global trade from domestic trade. The main difference is the geographical scope: global trade crosses national borders, while domestic trade is confined within one country.
3. Step 3: Analyze the options given in the problem. Check which statement correctly reflects the difference based on the definitions. For example, global trade is not limited to raw materials; it includes finished goods as well.
4. Step 4: Consider the role of regulation and transportation in both types of trade. Global trade is often regulated by international agreements and organizations, while domestic trade is regulated by local or national governments. Both types of trade require transportation.
5. Step 5: Conclude that the best description is the one that highlights the exchange between countries for global trade and within a single country for domestic trade.