If a Very Small Country Trades with a Very Large

question 7

Multiple Choice

If a very small country trades with a very large country according to the Ricardian model,then

• A) the small country will suffer a decrease in economic welfare.
• B) the large country will suffer a decrease in economic welfare.
• C) the small country only will enjoy gains from trade.
• D) the large country will enjoy gains from trade.
• E) both countries will enjoy equal gains from trade.

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Definitions:

Expected Total Cash Flows

The projection of all the cash that is anticipated to be received or paid out over a certain period of time in the future.

Cash Payback Period

The time period required for the returns from an investment to repay the initial capital outlay.

Annual Net Cash Flows

This term refers to the amount of money that flows in and out of a business over a year after all expenses have been accounted for.

Expected Total Cash Flows

An estimation of all cash inflows and outflows associated with an investment over its expected life, used to gauge its profitability.