To Benefit from Trade, a Person Should

question 87

Multiple Choice

To benefit from trade, a person should:

• A) specialize in an activity for which she has an absolute advantage.
• B) specialize in an activity for which she has a comparative advantage.
• C) do everything she possibly can.
• D) do nothing at all.

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Definitions:

Excess Reserves

Funds that banks hold over and above the legal reserve requirement set by central banking authorities.

Government Bonds

Securities issued by a government to raise funds from the public to finance its expenditure needs.

Monetary Policy

The process by which the central bank or monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure economic stability.

U.S. Treasury Department

A federal government department responsible for managing government revenue, issuing currency, and supervising national banks.