If a nation is more productive than a trading partner, can it still gain from trade with that partner? Use the concepts of absolute and comparative advantage to explain
What will be an ideal response?
The gains from trade do not rely on overall productivity (absolute advantage) but on differences in relative prices (comparative advantage). In producing a good or service, as long as a trading partner gives up fewer units of an alternate product, we can gain from trade with them.
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An individual holds $10,000 in a non-interest-earning checking account, and the overall price level rises significantly. Other things being constant, we would expect
A) the individual's real wealth to decrease and consumption to decline. B) no change in the individual's real wealth but a decline in real national product. C) the individual's stock of real wealth to decrease but real national income to increase. D) the individual's wealth to increase.
Economists use M2 to measure the amount of money that is regularly used in transactions
Indicate whether the statement is true or false