In Order for Mutually Beneficial Trade to Occur,at What Level

question 115

Multiple Choice

In order for mutually beneficial trade to occur,at what level must the exchange rate between the goods involved be set at?

• A)at a level where each country can export a good at a price below the opportunity cost of producing the good in the domestic market
• B)at a level where each country can import a good at a price below the opportunity cost of producing the good in the domestic market
• C)at a level where the exchange ratio is exactly equal to the opportunity cost of producing the good in each country
• D)at a level where each country will specialize in the production of those goods in which it has an absolute advantage

---

Definitions:

Par Value

A nominal or face value assigned to a share of stock by the corporation's charter, different from the market value.

Journal Entry

A record in the accounting journal that represents a business transaction, including information on debits and credits to various accounts.

Sale of Bonds

The process by which a corporation or government issues bonds to investors in order to raise capital.

Coupon Rate

The annual interest rate paid on a bond, expressed as a percentage of the bond's face value.