Which of the Following Observations Is True of the Principle

question 200

Multiple Choice

Which of the following observations is true of the principle of comparative advantage?

• A)It arises from the absolute cost advantage.
• B)It helps determine most efficient patterns of production.
• C)It was advanced by Adam Smith.
• D)It means producing a good using smaller quantities of resources than others.

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Definitions:

Effective Interest Rate

The actual return on an investment, taking into account the effect of compounding interest as opposed to the nominal rate.

Contract Interest Rate

The interest rate specified in a loan agreement or contract, typically fixed for the life of the loan.

Face Value

The nominal value or dollar value of a security stated by the issuer, also known as par value, especially relevant for bonds and stock certificates.

Market Rate

The prevailing interest rate available in the marketplace on investments or loans, subject to changes based on supply and demand and economic conditions.