An Economic Theory About International Trade That Is Based on the Assumption

question 53

Multiple Choice

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

• A)is useless,since the real world has many countries trading many goods.
• B)can be useful only in situations involving two countries and two goods.
• C)can be useful in the classroom,but is useless in the real world.
• D)can be useful in helping economists understand the complex world of international trade involving many countries and many goods.

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Definitions:

Mutually Exclusive

Situations or options where the choice of one excludes the ability to choose any of the other options.

After-tax Cash Flows

After-tax cash flows are the net cash flows a company generates after accounting for taxes.

Salvage Value

Salvage value is the estimated resale value of an asset at the end of its useful life.

Equivalent Annual Annuity

The annual cash flow of an investment that yields the same present value as the investment’s costs, used in capital budgeting to compare the profitability of investments.