A Country That Does NOT Engage in Trade Can Benefit

question 67

Multiple Choice

A country that does NOT engage in trade can benefit from trade only if

• A) pre-trade and free-trade relative prices are not identical.
• B) it employs a unique technology.
• C) it has an absolute advantage in at least one good.
• D) its wage rate is below the world average.
• E) pre-trade and free-trade relative prices are identical.

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Definitions:

Supply-Side Economists

Economists who believe that reducing taxes and decreasing regulation will stimulate economic growth by encouraging investment, production, and employment.

Marginal Tax Rates

The rate at which the next dollar of taxable income will be taxed, reflecting the percentage of additional income that is paid in tax.

Rational Expectations Theory

An economic idea suggesting that individuals make predictions about the future based on all available information and past experiences, thereby impacting markets and the economy.

Fiscal Policies

Fiscal policies are government strategies involving taxation and spending decisions designed to influence economic conditions, including growth, inflation, and unemployment.