The theory of comparative advantage shows that the gains from international trade result from producing:
a. at a lower opportunity cost.
b. at a lower absolute cost

The formula for the government spending multiplier is

A) (1 + b) / (1 - b). B) -b / (1 - b). C) 1 / (1 - b). D) b / (1 - b).

Initially, the economy is at point B in Figure 10-3 above. We may conclude that over time,

A) per person saving and steady state investment will remain stable at points C and D respectively. B) per person capital will grow, point D to E since per capita savings exceed steady state investment, point C is greater than point D. C) per person capital will grow, point D to E since per capita savings is less than steady state investment, point C is greater than point D. D) per person saving and steady state investment will remain stable at points D and C respectively.