Which of the Following Ideas Is Closely Linked to the Theory

question 46

Multiple Choice

Which of the following ideas is closely linked to the theory of absolute advantage? 

• A) All international trade must be closely regulated by governments. 
• B) Free market forces should determine how much to trade with minimal government intervention. 
• C) Governments should actively protect domestic industries from imports and vigorously promote exports. 
• D) Nations should specialize in economic activities in which they have comparative advantage.

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Definitions:

Factoring with Recourse

A financial transaction where a business sells its accounts receivable to a third party (factor) but remains responsible if the debtor does not pay.

Sales Return

Goods returned by the buyer to the seller due to issues like defects or dissatisfaction, reversing a portion of sales.

Fair Value

An estimate of the market value of an asset or liability, based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Interest-Bearing Note

A debt instrument that requires the issuer to pay interest to the holder at specified intervals up to the maturity date, when the principal amount is due to be repaid.