Which of the Following Has Been Confirmed by Empirical Tests

question 13

Multiple Choice

Which of the following has been confirmed by empirical tests of the Ricardian model?

• A) All predictions of the model for a multi-product, multi-country world are highly unrealistic.
• B) The existence of nontraded goods results in a high degree of specialization among countries.
• C) International trade has no impact on income distribution.
• D) The unimportance of economies of scale as a cause of trade.
• E) Companies tend to export goods in which they have a relatively high level of productivity.

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Definitions:

Business Cycle

The fluctuations in economic activity that an economy experiences over a period of time, marked by phases of expansion and contraction.

Government Spending

Expenditures by government agencies on goods and services that are intended to improve the nation's economy and the welfare of its citizens.

GDP

Gross Domestic Product, the total value of all goods and services produced within a country's borders in a specific period of time.

Government Borrowing

The process by which governments finance their expenditures by borrowing money, typically through issuing bonds.