When Serena from the United States Flies to Scotland on a Canadian

question 228

Multiple Choice

When Serena from the United States flies to Scotland on a Canadian airline, stays in an Edinburgh hotel, and buys many wool sweaters from Scotland to bring home, she is

• A)decreasing the trade deficit.
• B)being disloyal and unpatriotic.
• C)contributing to the negative balance of payments.
• D)buying American-made goods.
• E)buying American-produced services.

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Definitions:

Specialization

The process of focusing on and becoming expert in a particular subject or skill, often resulting in increased efficiency and productivity in economic contexts.

Exchange

The act of giving one thing and receiving another (especially of the same type or value) in return.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its competitors, contributing to efficiency in international trade.

Economic Principle

A basic concept or rule that underlies the functioning of economies, guiding the allocation of resources.