The Ricardian Model Demonstrates That

question 15

Multiple Choice

The Ricardian model demonstrates that

• A)trade between two countries may benefit both if each exports the product in which it has a comparative advantage.
• B)trade between two countries will benefit both countries.
• C)trade between two countries may benefit one but harm the other.
• D)trade between two countries always benefits the country with a larger labor force.
• E)trade between two countries may benefit both regardless of which good each exports.

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Definitions:

Over-Valued

A term describing an asset or security whose price is considered higher than its underlying value or fundamentals justify.

Compounded Continuously

The process of calculating interest on an investment or loan in such a way that the interest itself earns interest, occurring an infinite number of times per period.

Instantaneous

Occurring or done in an instant or immediately.

Perpetuity

An annuity that pays a set amount of money indefinitely, with no end date.