Use the Following Figure to Answer the Question

question 70

Multiple Choice

Use the following figure to answer the question :

-Interest rates increased continuously during the 1970s. The most likely explanation is

• A)banking failures that reduced the money supply.
• B)a rise in the level of income.
• C)the repeated bouts of recession and expansion.
• D)increasing expected rates of inflation.

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Definitions:

Factor Endowments

The quantities of various resources a country possesses, which can affect its comparative advantage in international trade.

Free-Trade Theories

Economic theories advocating for the elimination of barriers to the exchange of goods and services between nations, to encourage trade and economic growth.

Mercantilism

A trade theory which suggests that trade generates wealth for a country with a trade surplus, with emphasis on colonization and military conquest.

Interventionist Trade Theory

A theory suggesting that government intervention in international trade through policies and regulations is necessary to correct market failures and protect domestic industries.