The Trade Theory That Says Countries Should Concentrate Production on Those

question 73

Multiple Choice

The trade theory that says countries should concentrate production on those products using their most abundant production factors is the ________.

• A)factor proportions theory
• B)theory of comparative advantage
• C)theory of absolute advantage
• D)theory of nontradable goods

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Definitions:

Stagflation

A condition of slow economic growth and relatively high unemployment accompanied by rising prices, or inflation, challenging the usual economic assumptions.

Permanent Income

A theory suggesting that an individual's consumption choices are based on their long-term income expectations rather than their current income.

Economic Decisions

Refers to choices made by individuals, businesses, or governments regarding allocation of resources to satisfy various needs and wants.

Aggregate Supply

The total supply of goods and services available to a particular market from producers at different price levels.