Explain the difference between comparative advantage and absolute advantage and which concept should be used to make trade decisions.
What will be an ideal response?
Comparative advantage refers to being able to produce something at a lower opportunity cost, whereas absolute advantage refers to being able to produce something using fewer resources. Trade is most productive when it is based on comparative advantage; that is, when each party produces and sells items that it can produce at a lower opportunity cost than its trading partner. By exchanging products based on comparative advantage, each partner achieves gains in the form of lower costs and wider variety of goods.
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A. increase by more than $50 billion. B. stay constant. C. increase by $50 billion. D. increase by less than $50 billion.
Refer to the information above. Net investment becomes more unstable if j ________ and v* ________
A) rises, rises B) rises, falls C) falls, rises D) falls, falls
Excess supply of a product exerts ___________pressure on prices
a. Zero b. No c. Upward d. Downward
If the actual price level is lower than the expected price level, the economy will contract in the short run
a. True b. False Indicate whether the statement is true or false