Given the Information in the Table Above, If Wages Were

question 22

Multiple Choice

Given the information in the table above, if wages were to double in Home, then Home should

• A) export cloth.
• B) export widgets.
• C) export both and import nothing.
• D) export and import nothing.
• E) export widgets and import cloth.

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Definitions:

Forward Contract

A tailor-made agreement between two entities to purchase or sell a valuable at an agreed price on a predetermined date in the future.

July Futures Contract

A standardized, legal agreement to buy or sell a commodity or financial asset at a predetermined price at a specified time in July.

Settle Price

The official price at the end of a trading session on a futures exchange, used for calculations of margin and account balances.

Option Premium

The price paid for the rights granted by an options contract, not considering the actual trading of the underlying asset.