Which of the following best describes the relationship between the development of trade and the development of technology in economics?

• A. Technological advancements often facilitate trade by reducing costs and increasing efficiency.
• B. There is no significant relationship between trade and technology in economics.
• C. Trade development always leads to technological stagnation.
• D. Technology development is only important for domestic markets, not for international trade.

Answer: (A)

Verified step by step guidance

1. Understand the key concepts: 'trade development' refers to the expansion and increase of exchange of goods and services between countries or regions, while 'technology development' refers to improvements and innovations in methods, tools, and processes that increase productivity and efficiency.
2. Recognize that technological advancements can reduce transportation and communication costs, improve production methods, and enhance information flow, all of which facilitate trade by making it cheaper and more efficient.
3. Consider the feedback loop: as trade expands, it can also stimulate further technological innovation by exposing firms to new ideas, competition, and larger markets, creating incentives to innovate.
4. Evaluate the incorrect options by analyzing their claims: for example, the idea that trade development leads to technological stagnation contradicts historical evidence where trade often encourages innovation.
5. Conclude that the best description is that technological advancements often facilitate trade by reducing costs and increasing efficiency, highlighting the positive and mutually reinforcing relationship between trade and technology.