Answer the following statements true (T) or false (F)
1.The price-specie-flow mechanism illustrated why nations could not maintain trade surpluses or trade deficits over the long run.
2.The marginal rate of transformation equals the absolute slope of a country's production possibilities frontier.
3.Assume that Germany has higher labor productivity and higher wage levels than France. Germany can produce a commodity more cheaply than France if its productivity differential more than offsets its wage differential.
4.Ricardo's theory of comparative advantage does NOT take into account demand conditions when determining relative commodity prices.
5.If Canada has a higher wage level and higher labor productivity than Mexico, Canada will necessarily produce a good at a higher labor cost than Mexico.
1.True
2.True
3.True
4.True
5.False
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