The law of comparative advantage explains why
A. individuals choose specialized careers.
B. firms specialize in the production of certain goods.
C. nations develop strengths in certain industries.
D. All of the responses are correct.
Answer: D
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Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting downward C. Aggregate demand shifting rightward D. Aggregate demand shifting leftward
The foreign exchange rate
A. is not relevant when comparing the GDPs of various countries. B. is the price of one currency in terms of another. C. is the same as the price of a product in U.S. dollars. D. is the price of one good or service as compared to a similar good or service.