Use the Table Below to Answer the Following Question

question 64

Multiple Choice

Use the table below to answer the following question. The table outlines the production possibilities of Slavia and Italia for food and clothing. The law of comparative advantage suggests that

• A)neither country could gain from trade, even if the costs of transporting the products were zero.
• B)Italia could not gain from trade because it has an absolute advantage in producing both goods.
• C)both countries could gain if Italia traded food for clothing produced in Slavia.
• D)both countries could gain if Slavia traded food for clothing produced in Italia.

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, obsolescence, or a decline in value.

Current-Rate Method

A method of foreign currency translation where all financial statements are converted at the current exchange rate at the time of reporting, affecting balance sheet and income statement items.

Hyper-inflationary Economy

A situation where an economy experiences extremely high and typically accelerating rates of inflation, leading to a rapid erosion of the real value of the local currency.

Financial Statements

Formal records of the financial activities and position of a business, individual, or other entity.