Suppose Mexico Has a Comparative Advantage Relative to the United

question 281

Multiple Choice

Suppose Mexico has a comparative advantage relative to the United States in the manufacture of clothing and the United States has a comparative advantage in producing agricultural products. Which of the following is most likely to occur?

• A) Mexico and the United States will not trade agricultural products or clothing.
• B) Mexico will sell clothing to the United States and the United States will sell agricultural products to Mexico.
• C) Mexico will sell agricultural products to the United States and Mexico will buy clothing from the United States.
• D) Mexico will sell clothing to the United States but not buy any agricultural products from the United States.

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Definitions:

Compounded Annually

Interest calculated once a year on the initial principal and the accumulated interest of previous periods of a deposit or loan.

Deferred Annuity

An insurance product that delays income payments until the investor elects to receive them, which can be many years after the initial investment.

Ordinary Annuity

A series of equal payments made at regular intervals, with the interest compounded at the end of each period.

Compounded Semi-annually

Interest calculation method where interest is added to the principal twice a year, increasing the amount on which future interest is calculated.