If Each Country Specialises in Producing Goods and Services in Which

question 47

Multiple Choice

If each country specialises in producing goods and services in which it has a comparative advantage, international trade:

• A)can raise the standard of living in all trading countries
• B)lowers the standard of living in all trading countries
• C)leaves the standard of living unchanged
• D)increases the political power of the trading countries

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Definitions:

Excise Tax

A type of tax imposed on specific goods, services, or activities, often used to discourage consumption of certain products or to raise government revenue.

Efficiency Loss

The decrease in economic efficiency that occurs when market conditions prevent the optimal allocation of resources, often caused by market failures or interventions.

Tax

A compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Marginal Benefit

The extra utility or satisfaction gained from the utilization or creation of one more unit of a product or service.