If Country A has an absolute advantage over Country B in the production of every commodity:
A. mutual gains from trade between Country A and Country B would be impossible.
B. Country B would be able to gain from trade but not country A.
C. the joint output of the two countries could not be increased through specialization and exchange.
D. mutual gains from trade would still be possible.
Answer: D
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If both money demand and commodity demand are unstable, as many activists believe, which type of policy target would most likely lead to a stable economy? (assume no supply-side shocks, and a fixed price level)
A) money supply target B) real GDP target C) interest rate target D) none of the above
All else equal, if individuals save less because inflation lowers returns on savings, this should ________ the supply of loanable funds and ________ the capital stock
A) increase; raise B) increase; reduce C) decrease; raise D) decrease; reduce