Which of the following problems hinder international trade? I. Political instability II. Low tariffs III. Inadequate foreign exchange IV. Strained relations

Analyze the question: You are asked which items are problems (barriers) that hinder international trade. Be careful: one of the four statements is actually something that helps trade.

Concept: International trade is the exchange of goods and services between countries. It is hindered by anything that makes it harder, costlier, or riskier to trade across borders.

Evaluate each statement:

• I. Political instability: This hinders trade. Wars, coups, and unrest disrupt production, transport, and payments, and discourage foreign investors and traders.
• II. Low tariffs: This does not hinder trade. Tariffs are taxes on imports or exports. Low tariffs make goods cheaper and encourage trade. It is high tariffs that hinder trade.
• III. Inadequate foreign exchange: This hinders trade. A country that lacks foreign currency cannot pay for imports.
• IV. Strained relations: This hinders trade. Poor diplomatic relations can lead to embargoes, border closures, and trade restrictions (for example, border closures between countries in tension).

Result: The problems are I, III and IV. Statement II is eliminated.

Matching to the options:

• A. I, II and IV: includes II ✗
• B. II, III and IV: includes II ✗
• C. I, II and III: includes II ✗
• D. I, III and IV: ✓

Exam tip: In "which of the following hinders..." questions, look for the one "trap" statement that actually does the opposite. Here, the word "low" in "low tariffs" is the trap. Once you spot it, cross out every option containing II, and only D remains. Always ask yourself: "Does this make trade easier or harder?"