Which Theory Suggests That a Country Should Produce and Export

question 22

Multiple Choice

Which theory suggests that a country should produce and export those goods and services for which it is relatively more productive than other countries and import those goods and services for which other countries are relatively more productive?

• A) relative advantage
• B) comparative advantage
• C) absolute advantage
• D) specialization of countries

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Definitions:

Residual

The amount remaining after the principal parts have been taken away or used up, often used in financial contexts.

Dividend Aversion

A theoretical behavior where investors prefer companies that retain earnings over those that pay out dividends, possibly due to tax advantages.

Capital Gains

The increase in value of an asset or investment over time, which becomes apparent when the asset is sold for more than its purchase price.

Tax Rates

The percentage of income or value of goods taxed by the government.