According to the Principle of Comparative Advantage, If a Rich

question 189

Multiple Choice

According to the principle of comparative advantage, if a rich country trades with a poor country, then

• A) the rich country will benefit and the poor country will lose.
• B) the rich country will lose and the poor country will benefit.
• C) both countries will benefit.
• D) neither of the countries will benefit.

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Definitions:

Imports

Goods and services brought into a country from abroad for sale.

Trade Deficit

It occurs when a country's imports exceed its exports over a certain period, leading to more money leaving the country than entering it.

High Tariffs

Elevated taxes imposed on imported goods to protect domestic industries by making foreign products more expensive compared to local products.

Trade Deficit

A situation where a country's imports exceed its exports during a specific time period, indicating a negative balance of trade.