The Principle of Comparative Advantage Explains How

question 134

Multiple Choice

The principle of comparative advantage explains how

• A)one nation can take advantage of another one through international trade.
• B)two nations may engage in mutually beneficial trade, even though one of them is more productive than the other.
• C)one individual can take advantage of another through international trade.
• D)some people are good at producing everything, while others have no comparative advantages.
• E)some nations end up with large trade surpluses.

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Definitions:

Financial Statements

Compiled reports that convey the financial performance and position of a company, including the balance sheet, income statement, and cash flow statement.

Net Cash Flow

The difference between a company's total cash inflows and outflows during a specific period.

Financial Statements

Reports that summarize the financial performance, position, and cash flows of a business over a specific period.

Indirect Method

A way to prepare cash flow statements where net income is adjusted for non-cash expenses, changes in working capital, and non-operating cash flows to calculate cash flow from operating activities.