Which of the following is a risk associated with international trade?

• A. All countries will experience equal economic growth.
• B. Tariffs always decrease consumer prices.
• C. International trade eliminates the need for government regulation.
• D. Domestic industries may suffer due to increased foreign competition.

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of international trade, which involves the exchange of goods and services across countries, allowing countries to specialize based on comparative advantage.
2. Step 2: Recognize that while international trade generally promotes economic growth and efficiency, it can also create risks or downsides for certain groups within countries.
3. Step 3: Identify common risks associated with international trade, such as domestic industries facing increased competition from foreign producers, which can lead to job losses or business closures in those industries.
4. Step 4: Evaluate the given options by comparing them to economic principles: equal economic growth for all countries is unlikely, tariffs do not always decrease consumer prices, and international trade does not eliminate the need for government regulation.
5. Step 5: Conclude that the risk 'Domestic industries may suffer due to increased foreign competition' correctly reflects a well-known potential downside of international trade.