Suppose that with international trade now a possibility, two trading nations restructure their production from both having produced clothes and food to one producing clothes and the other producing food. What gains do they experience? What problems may they experience?
a. Gains are higher labor productivity and greater total output. Problems may be economic inefficiency
b. Gains are economic efficiency. Problems may be trade wars.
c. Gains are people in both nations having higher incomes. Problems may be that the nations cannot find an acceptable trading price between food and clothes.
d. Gains are higher labor productivity and greater total output. Problems may arise from dependence on the other for vital goods.
e. Gains are economic efficiency. There are no problems as long as they engage in free trade.
D
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A) the U.S. Treasury B) a commercial bank C) a money market mutual fund D) a thrift institution, such as a savings and loan association
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