The Theory of Comparative Advantage States That

question 52

Multiple Choice

The theory of comparative advantage states that:

• A) Productivity rises more quickly when countries produce goods and services for which they have a natural talent.
• B) Productivity decreases when countries produce goods and services based on their natural resources.
• C) All countries start out on an equal playing field.
• D) Countries that operate under a policy of isolationism have a comparative advantage.

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Definitions:

Savers

Individuals who allocate a portion of their income towards savings, either in cash, bank deposits, or other forms of investment, for future use.

Investors

Individuals or entities that allocate capital with the expectation of receiving financial returns.

Intermediaries

Entities or individuals that act as a middleman in transactions between buyers and sellers, facilitating trade and potentially adding value.

Dividends

payments made by a corporation to its shareholder members, usually derived from the company's profits.