World Trade Declined in the 1930s

question 72

Multiple Choice

World trade declined in the 1930s. Which of the following is the best explanation of that decline?

• A) World income shrank, and trade restrictions increased.
• B) World income shrank, but there were few changes in trade restrictions.
• C) Trade restrictions increased, but there was little change in world income.
• D) The incomes of most nations increased, allowing them to become more self-sufficient.

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Definitions:

Unobservable Actions

Actions taken by individuals or entities that cannot be seen or monitored by others, often discussed in the context of economics or game theory.

Moral Hazard

A situation where one party is more likely to take risks because the negative consequences of the risk will be borne by another party.

Unobservable Actions

Actions taken by parties in a contract or agreement that cannot be directly observed or monitored by others.

Adverse Selection

A situation in which sellers have information that buyers do not, or vice versa, leading to an inefficient market outcome.