​Exhibit 2-10 Refer Exhibit 2-10

question 96

Multiple Choice

​Exhibit 2-10 Refer Exhibit 2-10. Which of the following statements is true?

• A)There would be no gains from trade between person A and person B because the opportunity cost of producing one unit of good X (or one unit of good
• Y)is the same for both persons.
• B)Both person A and person B will benefit from specialization and trade as long as person A specializes in the production of good X and person B specializes in the production of good Y.
• C)Both person A and person B will benefit from specialization and trade as long as person A specializes in the production of good Y and person B specializes in the production of good X.
• D)Both person A and person B will benefit from trade as long as person A produces both good X and good Y, and person B produces neither good.
• E)Both person A and person B will benefit from trade as long as person B produces both good X and good Y, and person A produces neither good.

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Definitions:

Line of Credit

An arrangement between a financial institution and a customer that establishes a maximum loan balance that the borrower can access.

Maturity Matching Principle

A financial management strategy that involves matching the duration of assets with the duration of liabilities, to manage risk and ensure funding adequacy over time.

Project

A planned set of interrelated tasks to be executed over a fixed period and within certain cost and other limitations.

Self-Liquidating Loans

Loans that are structured to be paid off through the cash flow generated by the project or asset they finance.