The Law of Comparative Advantages Explains Why

question 56

Multiple Choice

The law of comparative advantages explains why

• A)advanced nations will not trade with less-developed countries.
• B)an advanced nation will not trade with other countries.
• C)less-developed countries only trade among themselves.
• D)nations trade with each other, regardless of their relative levels of economic development.
• E)nations erect trade barriers.

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Definitions:

Effective Yield

A measure of the return on an investment, taking into account the effect of compounding interest.

Simple Annualized

A method of calculating the return on an investment by annualizing its simple interest without accounting for compounding.

Holding-Period Return

The total return received from holding an asset or portfolio of assets over a specified period of time.

Quarterly Compounded

Interest that is calculated and added to the principal every three months, increasing the amount on which subsequent interest calculations are based.