Should countries specialize in producing goods and services based on having a comparative advantage or an absolute advantage? Why?
What will be an ideal response?
Countries should specialize in producing products based on comparative advantage because this allows countries to produce those products and services at a lower opportunity cost than competitors.
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The Smoot-Hawley Act was enacted in
A) 1980. B) 2000. C) 1930. D) 2010.
Refer to Figure 9.1. If the government establishes a price ceiling of $20, total consumer and producer surplus will be
A) $30. B) $400. C) $600. D) $900. E) $1200.
When prices rise, consumers and businesses hold larger money balances. This reduces the supply of loanable funds, increases the interest rate, and discourages both consumption and investment. This process is called the:
a. interest-rate effect. b. real balance effect. c. investment effect. d. disinvestment effect.
Which statement makes sense? a. Fixing exchange rates causes currency markets to reach equilibrium quickly. b. Having an absolute advantage in the production of goat cheese means the country will specialize in and produce all of the goat cheese traded
c. Arbitrage opportunities are quickly taken. d. Floating exchange rates reduce uncertainty in the currency markets. e. When the dollar depreciates, U.S. consumers can buy more imported goods.