The Ricardian Model of Comparative Advantage Lends Support to the Argument

question 8

Multiple Choice

The Ricardian model of comparative advantage lends support to the argument that

• A) trade tends to worsen the conditions of unskilled labor in rich countries.
• B) trade tends to worsen the conditions of owners of capital in rich countries.
• C) trade tends to worsen the conditions of workers in poor countries.
• D) trade tends to worsen the conditions of workers in rich countries.
• E) trade is mutually beneficial to the countries that engage in it.

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Definitions:

Demand for Loanable Funds

The desire for borrowing money that exists among individuals, businesses, and governments in an economy, usually influenced by interest rates.

Interest Rate

The cost, in terms of a percentage of the principal, levied by a lender on a borrower for asset usage.

Supply of Loanable Funds

The supply of loanable funds is the total amount of capital available for borrowers to secure, typically originating from savings in the economy, and forming the basis for interest rates determination.

Interest Rate

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal, per period of time.