The Ricardian Two-Country, Two-Good Model Predicts That There Are Potential

question 38

Multiple Choice

The Ricardian two-country, two-good model predicts that there are potential benefits from trade, but NOT

• A) when both countries have the same types of technology available.
• B) when one country has significantly lower wages than the other country.
• C) the mechanism that determines which country will specialize in which good.
• D) the effect of trade on income distribution.
• E) when one country has an absolute advantage in the production of both goods.

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Definitions:

Straight-Line Method

An accounting method for calculating depreciation by evenly spreading the cost of an asset over its useful life.

Goodwill Impairment

A write-down of goodwill on the balance sheet when its carrying value exceeds the fair value, indicating that the asset is not as valuable as previously thought.

Consolidated Net Earnings

The total net income of a parent company and its subsidiaries after eliminating internal transactions and distributions among them, reflecting the group's overall profitability.

Amortization

The gradual reduction of the cost or value of an intangible asset over a specified time period, typically for accounting and tax purposes.