-Suppose the Production Possibilities for Two Countries,producing Either Food or Clothing,are

question 92

Multiple Choice

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.The U.S.has a comparative advantage in producing

• A)food.
• B)clothing.
• C)food and clothing.
• D)neither good.

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Definitions:

Exchange Controls

Restrictions that a government may impose over the quantity of foreign currency demand by its citizens and firms and over the rate of exchange as a way to limit the nation’s quantity of outpayments relative to its quantity of inpayments (in order to eliminate a payments deficit).

Flexible Exchange Rates

Foreign exchange system where the value of currencies is determined by supply and demand in the forex market, without direct government intervention.

Services Trade

The exchange of services between countries, including sectors such as finance, insurance, transport, and tourism.

Goods Trade

The act of buying, selling, or exchanging tangible products between countries or within a country.