Suppose that Spain has a comparative advantage in hats and Portugal has a comparative advantage in doormats. Under a system of free trade, each country specializes and then trades with the other. If the price increases from four hats per doormat to five hats per doormat,
a. people in Portugal will not want to buy as many hats
b. Spain no longer has a comparative advantage in hats
c. Portugal no longer has a comparative advantage in doormats
d. some of the gains from trade shift to Portugal
e. some of the gains from trade shift to Spain
D
Economics
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All other things constant, if the interest rate decreases on account of a monetary policy: a. the demand for investment curve shifts to the right
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