According to the classical theory of international trade
A) only countries with low wages will export.
B) only countries with high wages will import.
C) countries with high wages will have higher relative prices of all goods.
D) All the above are false.
D
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Refer to Table 2-17. Which of the following statements is true?
A) Lucy has a comparative advantage in making both products. B) James has a comparative advantage in making both products. C) Lucy has a comparative advantage in making tricycles and James in making wagons. D) Lucy has a comparative advantage in making wagons and James in making tricycles.
The claim that inflation is necessary for development is based on the idea that
a. rapidly rising demand is necessary to spur productive activity b. the problems brought on by inflation will attract foreign aid c. the process of structural change naturally forces prices up in some sectors, while other sectors'prices do not fall d. higher prices will force people to work harder e. none of the above