When two countries trade with one another, it is most likely because...
a. the wealthy people in each of the two countries are able to benefit, through trade, by taking
When two countries trade with one another, it is most likely because
advantage of other people who are poor.
b. some people involved in the trade do not understand that one of the two countries will become worse-off because of the trade.
c. the opportunity costs of producing various goods are identical for the two countries.
d. the two countries wish to take advantage of the principle of comparative advantage.
d. the two countries wish to take advantage of the principle of comparative advantage.
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When government revenues exceed government outlays in a particular year, this is called
A) a budget surplus. B) a budget deficit. C) the national debt. D) fiscal policy.
Appendix: An optimal incentives contract can induce the revelation of true costs in a partnership by
a. imposing penalties when costs are overstated b. offering bonus payments when costs are verified c. renewing the reliance relationship d. linking revealed cost to the partner's foregone expected profits e. enlisting third-party enforcement
Which of the following is true of a recessionary period?
a. It is usually accompanied by an improvement in the value of an economy's currency. b. It is usually accompanied by low levels of inflation c. It is usually accompanied by a dramatic decline in the stock of inventories. d. It usually lasts for a few months. e. It leads to a drastic decline in government spending.
A nominal quantity is measured:
A. in terms of current dollar value. B. in physical terms. C. using the consumer price index. D. by indexing.