Given the Information in the Table Above, If the World

question 5

Multiple Choice

Given the information in the table above, if the world equilibrium price of widgets were 4 cloth, then

• A) both countries could benefit from trade with each other.
• B) neither country could benefit from trade with each other.
• C) each country will want to export the good in which it enjoys comparative advantage.
• D) neither country will want to export the good in which it enjoys comparative advantage.
• E) both countries will want to specialize in cloth.

---

Definitions:

Collateralized Debt Obligation

A type of structured asset-backed security (ABS) with multiple tranches that can invest in different types of debt, including bonds and loans, which are grouped together.

Corporate Loans

Loans provided to companies to finance their operations, investments, or expansion projects.

Credit Default Swaps

Financial derivative contracts that allow an investor to swap or offset their credit risk with that of another investor.

Securitization

The process of converting an asset, often a loan or a group of loans, into a marketable security, typically for raising capital.