Suppose That Country a Is Twice as Good at Producing

question 9

Multiple Choice

Suppose that country A is twice as good at producing widgets as country B.If the currency of B is twice as valuable as the currency of A,

• A)the comparative advantage will shift to an absolute advantage.
• B)trade will be an improved outcome for both A and B.
• C)the comparative advantage could be canceled out.
• D)none of the options

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Definitions:

Northwest Ordinance

A law passed in 1787 that provided a model for the organization of territories and set a precedent for the creation of new states.

Political System

The system of government by which a country or community is administered and regulated, encompassing institutions, political organizations, and norms.

Economic Growth

An increase in the production of goods and services in an economy over a period of time, often measured by the rise in Gross Domestic Product (GDP).

Sovereignty

The supreme power or authority of a state to govern itself or another state, often relating to its independence and control over its territory.