Refer to the Above Diagrams

question 75

Multiple Choice

Refer to the above diagrams.The solid lines are production possibilities curves; the dashed lines are trading possibilities curves.The trading possibilities curves imply that:

• A)both countries are experiencing an excess of exports over imports which results in economic growth.
• B)the domestic production possibilities curves entail unemployment and/or the domestic misallocation of resources.
• C)world resources will be allocated more efficiently if the two nations specialize and trade in accordance with comparative advantage.
• D)both nations will be worse off as a result of international specialization and trade.

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Definitions:

Shares Of Stock

Units of ownership interest in a corporation that give the owner a share in the company's profits and voting rights.

Market Rate

The prevailing interest rate available in the marketplace for similar financial instruments or loans.

Dividend Growth

The speed of growth in dividend disbursements to stockholders by a firm over successive periods.

Selling

The act of offering goods or services in exchange for money.