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Explain Why and How the Existence of Trade Costs Affects

question 31

Essay

Explain why and how the existence of trade costs affects arbitrage.


Definitions:

Gross Domestic Product

The total value of all goods and services produced within a country in a specific time period, used as a broad measure of economic activity and health.

Free Trade

An economic policy that allows imports and exports to occur without governmental tariffs, quotas, or other restrictions, promoting international trade.

Foreign Investment

Capital investment made by individuals or entities based in one country into the businesses or assets of another country.

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