Table 2-5 Table 2-5 Shows the Number of Labor Hours

question 5

Multiple Choice

Table 2-5
Table 2-5 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland.
-Refer to Table 2-5.Does either Estonia or Finland have an absolute advantage and if so,in what product?

• A)Finland has an absolute advantage in lumber.
• B)Estonia has an absolute advantage in lumber.
• C)Finland has an absolute advantage in both products.
• D)Estonia has an absolute advantage in cell phones.

---

Definitions:

Inflationary Gaps

A situation in macroeconomics where the demand for goods and services exceeds production due to excessive spending, leading to inflation.

Recessionary Gaps

Situations where the real GDP is lower than the potential GDP due to insufficient aggregate demand, leading to unemployment and underused resources.

Equilibrium GDP

The point at which the aggregate supply and aggregate demand within an economy are equal, indicating a state of economic balance.

Recessionary Gap

The difference between the actual output of an economy and its potential output, occurring during periods of economic downturn.