Use the Information Below to Answer the Following Questions

question 7

Multiple Choice

Use the information below to answer the following questions.
Fact 2.3.2
Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in a hour.
-Complete the following sentence.Given Fact 2.3.2,

• A)there will be gains from trade if Agnes specializes in the production of X and Brenda in Y.
• B)there will be gains from trade only if Agnes becomes faster at producing X.
• C)there will be gains from trade, no matter what Brenda and Agnes specialize in, as long as they specialize.
• D)there will be no gains from trade because Agnes has an absolute advantage.
• E)there will be gains from trade only if Agnes specializes in the production of Y and Brenda in X.

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Definitions:

Secondary Effects

The indirect impact of an event or policy that may not be easily and immediately observable. In the area of policy, these effects are often both unintended and overlooked.

Future Crises

Potential, unforeseen events that could lead to severe economic, social, or environmental problems.

Low-Interest Rate Policy

A monetary policy strategy used by central banks to maintain low borrowing costs to stimulate economic growth.

Housing Prices

The cost to purchase a residential property, which fluctuates based on demand, location, and economic conditions.