Suppose That in Paraguay,one of the Poorest Countries in the Americas,only

question 27

Multiple Choice

Suppose that in Paraguay,one of the poorest countries in the Americas,only two of the goods that are produced can compete in world markets,tea and DVD players.Given this success in exporting,Paraguay

• A) should specialize only in DVD players since tea production is an old industry.
• B) should specialize in the production of tea,since its people are probably too poor to buy DVD players.
• C) should stop exporting both goods and produce more food products for its people.
• D) is better off producing both goods in which it has a comparative advantage,relative to all other goods.

---

Definitions:

Money Supply

The sum total of financial assets available in an economy at a certain point in time.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling over a specific period.

Fiscal Policies

Government policies related to taxation and spending that aim to influence the overall economy.

Short Run

A period of time during which at least one input, such as plant size, is fixed and cannot be changed.