-Suppose the Production Possibilities for Two Countries,producing Either Food or Clothing,are

question 61

Multiple Choice

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.They can each produce any linear combination as well.Assuming free trade between these two countries,Canada will produce food

• A) as long as any positive amount of food is demanded.
• B) as long as more than 10 units of food are demanded.
• C) as long as people are willing to give up at least 1 unit of clothing to get a unit of food.
• D) as long as people are willing to give up more than 1/2 unit of clothing to get a unit of food.

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Definitions:

Dollar

The official currency of the United States, also used as a standard monetary unit in many other countries.

Net Exports

One country’s exports to other countries minus its imports from other countries.

Current Account

A component of a country's balance of payments that includes the trade balance, net income from abroad, and net current transfers.

Current Account Deficit

A situation where a country's total imports of goods, services, and transfers are greater than its total exports.