If the US Can Produce Pizza for $5 Each and Barrels of Barrels

question 66

Multiple Choice

If the U.S. can produce pizza for $5 each and barrels of beer for $25 each, and Germany can produce pizza for $7 each and barrels of beer for $21 each, then

• A)each country will produce both pizza and beer.
• B)the U.S. will produce beer and trade with Germany for pizza.
• C)the U.S. will produce pizza and trade with Germany for beer.
• D)All of the above.

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Definitions:

Cash Flows

The entirety of funds transferred inwards and outwards of a business, which is vital for maintaining operational liquidity.

Annuities

Financial products sold by financial institutions that are designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time.

Present Value

The current financial value of money to be obtained in the future or upcoming cash flow payments, quantified by a particular rate of return.

Cash Flows

The total amount of money being transferred in and out of a business, especially as affecting liquidity.