Suppose That a Worker in Caninia Can Produce Either 2

question 56

Multiple Choice

Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by

• A)15 blankets and 35 meals.
• B)25 blankets and 40 meals.
• C)35 blankets and 45 meals.
• D)50 blankets and 80 meals.

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Definitions:

Foreign Currencies

The currencies of other countries that are used in international transactions or are sought as investments.

Swiss Franc Appreciates

Describes the increase in value of the Swiss Franc relative to other currencies.

Swiss Franc

The currency of Switzerland, known for its strength and stability, symbolized as CHF.

Creditor Nation

A country that has more claims (investments and loans) on other countries than other countries have on it, typically indicated by a positive balance of payments.