Which of the Following Statements Is True

question 139

Multiple Choice

Which of the following statements is true?

• A) Specialization and trade along the lines of comparative advantage allows nations to consume more than if they were to produce just for themselves.
• B) Free trade theory suggests that when trade takes place any gains made by one nation comes at the expense of another.
• C) According to the theory of comparative advantage, a nation should specialize in the production of those goods for which it has an absolute advantage.
• D) All of these.

---

Definitions:

Working Capital Investment

The funds invested in a company's short-term assets like inventory and receivables minus short-term liabilities, facilitating day-to-day operations.

Cash Inflows

Money received by a business from its operational activities, investments, or financing.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.

Net Present Value

A financial metric that calculates the current value of all future cash flows generated by a project, minus the initial investment cost.