When Two Countries Specialize and Trade

question 74

Multiple Choice

When two countries specialize and trade:

• A)they both can enjoy more output than either country could produce on its own.
• B)they can achieve consumption levels beyond their own production possibilities.
• C)both countries can gain surplus.
• D)All of these are true.

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Definitions:

Economic Security

The condition of having stable income or other resources to support a standard of living now and in the foreseeable future.

Underemployment

A situation in which workers are employed in positions requiring less education and skill than they have.

Productivity

A measure of the efficiency of production, often calculated as the ratio of outputs produced to inputs used.

Capital Flight

the large-scale exodus of financial assets and capital from a country due to economic instability or unfavorable investment conditions.