In the Mercantilist View of International Trade (In a Two-Country

question 14

Multiple Choice

In the Mercantilist view of international trade (in a two-country world) ,

• A) both countries could gain from trade at the same time, but the distribution of the gains Depended upon the terms of trade.
• B) both countries could gain from trade at the same time, and the terms of trade were of No consequence for the distribution of the gains.
• C) neither country could ever gain from trade.
• D) one country's gain from trade was associated with a loss for the other country.

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Definitions:

Futures Contract

A standardized legal agreement to buy or sell a specific commodity or financial instrument at a predetermined price at a specified time in the future.

Market Value

The current price at which an asset or service can be bought or sold.

Gross Profit

The financial gain made after subtracting the cost of goods sold from revenue, indicating the efficiency of a company in managing its production and labor costs.

Fair Value Hedge

A hedge of the exposure to changes in fair value of a recognized asset or liability or an identified portion of such an asset or liability that is attributable to a particular risk.