-Refer to Table 3-6

question 178

Multiple Choice

-Refer to Table 3-6. Which country has a comparative advantage in each product?

• A) Denmark has a comparative advantage in bread, and Italy has a comparative advantage in cheese.
• B) Denmark has a comparative advantage in cheese, and Italy has a comparative advantage in bread.
• C) Denmark has a comparative advantage in both goods, and Italy has a comparative advantage in neither good.
• D) Denmark has a comparative advantage in neither good, and Italy has a comparative advantage in both goods.

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Definitions:

Exchange Rates

The value of one country's currency in terms of another currency.

Canadian Dollars

The official currency of Canada, represented by the ISO code CAD.

Short-Run Exposure

Financial risk faced by companies in the immediate future due to exchange rate movements, affecting the value of foreign currency denominated transactions.

Exchange Rate Risk

The possibility that investors may face financial losses as a result of changes in foreign exchange rates.