Nations Will Be Able to Produce a Larger Joint Output

question 95

Multiple Choice

Nations will be able to produce a larger joint output and realize mutual gains when each specializes in the production of those items for which it is a low-opportunity cost producer and trades for those things that it could produce only at a high cost. This statement best describes the

• A) free rider problem.
• B) infant-industry argument.
• C) law of comparative advantage.
• D) equation of exchange.

---

Definitions:

Central Banks

National financial institutions that provide financial and banking services for a country's government and commercial banking system, as well as implementing the government's monetary policy and issuing currency.

Trade Barriers

Measures imposed by governments to regulate international trade, often to protect domestic industries from foreign competition.

International Monetary Fund

An international organization dedicated to fostering global monetary cooperation, securing financial stability, and facilitating international trade.

Founded

The act of establishing something (e.g., a company, organization, or institution) usually at a specific date.