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:

Current Account

A component of a country's balance of payments that measures the trade of goods and services, net income, and direct transfers with the rest of the world.

Financial Account

A component of the balance of payments that records investment flows and holdings of foreign assets by domestic residents and domestic assets by foreigners.

Official Reserves

Foreign currencies owned by the central bank of a nation.

Balance Of Payments

A document detailing every financial transaction between a country's inhabitants and international entities within a specific timeframe.