The Principle of _____ Explains Why France Can Produce White

question 101

Multiple Choice

The principle of _____ explains why France can produce white wine at a lower opportunity cost than the neighboring country of Germany.

• A)comparative advantage
• B)absolute advantage
• C)capital ferment
• D)opportunity-cost replacement

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Definitions:

Fixed-Weight Price Index

An economic measure that calculates price changes over time, holding the quantity of goods and services constant to avoid the effect of substitution.

Nominal Gross Domestic Product (GDP)

A rephrased term for Nominal GDP, referring to the market value of all final goods and services produced within a country in a year, unadjusted for inflation.

GDP Price Index

An economic metric that accounts for inflation by converting output measured at current prices into constant-dollar GDP.

Fixed-Weight Price Index

A method of calculating inflation or deflation that uses predetermined weights for different categories of goods and services, regardless of their current market importance.