A Country Engaging in Trade According to the Principles of Comparative

question 3

Multiple Choice

A country engaging in trade according to the principles of comparative advantage gains from trade because it

• A) is producing exports indirectly more efficiently than it could alternatively.
• B) is producing imports indirectly more efficiently than it could domestically.
• C) is producing exports using fewer labor units.
• D) is producing imports indirectly using fewer labor units.
• E) is producing exports while outsourcing services.

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Definitions:

Fiat Money

Fiat money is currency that a government has declared to be legal tender, despite it not being backed by a physical commodity.

Precious Metal

Rare, naturally occurring metallic elements of high economic value, typically used for currency, jewelry, and other arts because of their rarity, durability, and aesthetic qualities.

Fiat Money

A form of money officially accepted as legal tender, not supported by a real commodity, as declared by authorities.

Commodity Money

Money whose value comes from a commodity of which it is made, such as gold or silver, with intrinsic value.