According to the Principle of Comparative Advantage,specialization and Trade Increase

question 179

Multiple Choice

According to the principle of comparative advantage,specialization and trade increase a nation's total output since:

• A) Resources are directed to their highest productivity
• B) The output of the nation's trading partner declines
• C) The nation can produce outside of its production possibilities curve
• D) The problem of unemployment is eliminated

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Definitions:

Price Increase

A rise in the cost of goods or services over time, affecting the purchasing power of money.

Money Income

The total amount of monetary earnings or receipts accrued by an individual or household in a given time period.

Market Demand Curve

A graphical representation showing the quantity of a good that all consumers in a market are willing to buy at each price level.

Income Effect

The change in an individual's consumption resulting from a change in real income, with shifts in purchasing power influencing spending behaviors.