The Distinction Between International Trade and International Money Is Not

question 27

Multiple Choice

The distinction between international trade and international money is not entirely clear because

• A) real developments in the trade accounts do not have monetary implications.
• B) the balance of payments includes only real measures.
• C) developments caused by purely monetary changes have no real effects.
• D) trade models focus on real, or barter relationships.
• E) most international trade involves monetary transactions.

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Definitions:

Efficiency Loss

The loss of potential economic welfare when resources are not optimally allocated, leading to outcomes where potential benefits exceed costs.

Sacrificed Output

The quantity of goods or services forgone in the production of another good or service, highlighting the concept of opportunity cost.

Tax Revenue

The financial earnings governments receive through taxing.

Income Inequality

The unequal distribution of an economy’s total income among households or families.