The Idea of Comparative Advantage Tends to Imply That

question 35

Multiple Choice

The idea of comparative advantage tends to imply that:

• A)countries as a whole can be made better off through free trade and all segments of society will benefit.
• B)the countries who have greater resources will earn the greatest benefit from allowing free trade.
• C)when one country can produce more of a good than another country, that country should specialize in the production of that good.
• D)countries as a whole can be made better off through free trade, but individuals within that country could be hurt by trade if not compensated by the groups or individuals who are made better off by trade.

---

Definitions:

Money Supply

The cumulative total of financial resources in an economy, involving cash, coins, and the amounts in checking and savings accounts, at a given instant.

Economic Activity

The production, distribution, and consumption of goods and services within an economy, representing its overall health.

Discretionary Monetary Policy

A policy that involves the deliberate manipulation of interest rates and money supply by a central bank to influence the economy.

Capitalistic Economy

An economic system characterized by private ownership of the means of production and the creation of goods or services for profit.