Given the Following Classical-Type Table Showing the Fixed Money Prices

question 22

Multiple Choice

Given the following Classical-type table showing the fixed money prices of each good in each of the two countries:
$\begin{array} { l c c } & \underline{\text { Shoes } }&\underline{ \text { Wine} } \\\\\text { United States } & \text { \$20/pair } & \text { \$10/bottle } \\\text { Switzerland } & 100 \text { francs/pair } & 40 \text { francs/bottle }\end{array}$
If the exchange rate is flexible, the upper limit to the price of the dollar (i.e., the number of Swiss francs per dollar above which there is export of both goods by Switzerland) is

• A) 5 francs = $1.
• B) 4 francs = $1.
• C) 0.25 francs = $1.
• D) 0.20 francs = $1.

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Definitions:

Trade Deficit

A situation where a country's imports exceed its exports during a specific time period, indicating a negative balance of trade.

Trade Deficits

Trade Deficits occur when a country's imports of goods and services exceed its exports, indicating an outflow of domestic currency to foreign markets.

Economic Colony

A region or country controlled by a foreign power for the purpose of economic exploitation, often through trade and resource extraction.

Trade Balance

The difference in value between a country's imports and exports over a certain period, indicating the net exports of goods and services.