Some Time Ago,the Nation of Republica Opened Up Its Paper

question 102

Multiple Choice

Some time ago,the nation of Republica opened up its paper market to international trade.Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?

• A)The price of paper in Republica decreased as a result of the policy change.
• B)Republica began exporting paper as a result of the policy change.
• C)The domestic demand curve for paper shifted to the right as a result of the policy change.
• D)The domestic quantity of paper demanded increased as a result of the policy change.

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Definitions:

Forward Contract

A financial derivative instrument between two parties to buy or sell an asset at a specified future time at a price agreed upon today.

Settlement Date

The date on which a trade is finalized and the buyer must make payment and the seller deliver the asset.

Forward Rate

Refers to the agreed exchange rate for a currency transaction that will occur at a future date.

Exchange Gain

A profit resulting from holding foreign currencies that appreciate against the home currency.