Definition of Free Trade:
Free trade refers to the unrestricted exchange of goods and services between countries, without the imposition of trade barriers such as tariffs, quotas, or subsidies. It promotes open markets and encourages the flow of goods across borders, allowing countries to specialize in producing goods or services in which they have a comparative advantage.

Explanation of the Options:
a) Free exchange of goods: This option is partially correct, as free trade does involve the exchange of goods, but it also includes services and capital.
b) Absence of trade barriers: This option is also partially correct, as the absence of trade barriers is a key characteristic of free trade. However, it does not encompass the full meaning of free trade.
c) Trade liberalization: This option is the correct answer, as trade liberalization refers to the process of reducing or eliminating trade barriers, thus promoting free trade.
d) No taxes on goods: While free trade generally involves the reduction or elimination of tariffs, it does not mean that there are no taxes on goods. Other forms of taxation may still exist.

Benefits of Free Trade:
1. Increased economic efficiency: Free trade allows countries to specialize in producing goods or services in which they have a comparative advantage. This leads to increased efficiency and productivity, as resources are allocated to their most productive uses.
2. Expanded market access: Free trade opens up markets for businesses, allowing them to reach a larger customer base. This can lead to increased sales and profits.
3. Lower prices for consumers: With free trade, consumers have access to a wider range of goods at competitive prices. This increases consumer choice and purchasing power.
4. Increased competition and innovation: Free trade fosters competition, as businesses have to compete with foreign firms. This drives innovation, as companies strive to improve their products and services to stay competitive.
5. Job creation: While free trade can result in job displacement in certain sectors, it also creates new job opportunities in industries that benefit from increased trade.
6. Economic growth: Free trade has been linked to higher economic growth rates, as it encourages investment and capital flows, stimulates productivity, and fosters technological advancements.

Conclusion:
In conclusion, free trade refers to the process of trade liberalization, wherein countries reduce or eliminate trade barriers to promote the exchange of goods, services, and capital. Free trade offers numerous benefits, including increased economic efficiency, expanded market access, lower prices for consumers, increased competition and innovation, job creation, and economic growth.