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:

Derived Demand

Demand for one product that occurs because of demand for a related product.

Related Product

Goods or services that are associated with or complementary to another product, often enhancing its value or utility.

Demand

The desire of purchasers, consumers, or clients for a particular good or service accompanied by the ability to pay for it.

B₂B Purchasing Process

The series of steps that businesses go through when procuring goods or services from other businesses, including need identification, evaluation, and purchase decision.