A Considerable Advantage That Richer Countries Have Over Poorer Ones

question 46

Multiple Choice

A considerable advantage that richer countries have over poorer ones is exemplified by the fact that

• A) richer countries do not have to denominate their foreign debts in their own currencies.
• B) richer countries have the ability to denominate their foreign debts in foreign currencies.
• C) when demand falls for a poorer country's goods, this leads to a significant wealth transfer from foreigners to the poorer country, a kind of international insurance payment.
• D) richer countries have the ability to denominate their foreign debts in their own currencies.
• E) richer countries can extract trade advantages by using military power.

Understand the concepts of marginal and average products of labor.

Recognize how firms make decisions on output supply and production methods.

Understand the role of market price of output, input prices, and technology in determining production decisions.

Know the difference between long run and short run in economic terms.

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