Which Theory Attempted to Explain Why a Favorable Balance of Trade

question 93

Multiple Choice

Which theory attempted to explain why a favorable balance of trade could only exist in the short run, since it would automatically be eliminated in the long run?

• A) price-specie flow doctrine
• B) theory of absolute advantage
• C) theory of comparative advantage
• D) theory of fluctuating incomes

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Definitions:

Zhao

Refers to a historical state during the Warring States period of China or to the family name common in China, indicating a wide range of cultural and historical significance.

Tatami

The traditional woven straw mat used for floor covering in Japanese architecture.

Flooring Material

Materials used for the surface of floors, such as wood, tiles, carpet, or stone.

Inner Courtyard

A secluded open space surrounded by walls or buildings, typically found within the premises of a larger architectural structure like palaces or temples.