India Specializes in Business Process Outsourcing and Does This More

question 98

Multiple Choice

India specializes in business process outsourcing and does this more efficiently than any other country.It buys agricultural commodities,which it produces less efficiently than outsourcing activities,from the U.S.,even though it produces these agricultural commodities more efficiently than the U.S.Which of the following theories of international trade supports India's decision to buy agricultural commodities from the U.S.?

• A)Samuelson critique
• B)mercantilism
• C)Ricardo's theory of comparative advantage
• D)Adam Smith's theory of absolute advantage
• E)Leontief paradox

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Definitions:

Trade Deficit

A situation where a country's imports of goods and services exceed its exports.

Excise Tax

A tax imposed on specific goods, services, and activities, such as gasoline, tobacco, and alcohol, often used to discourage their use and generate revenue.

Personal Income Tax

Tax imposed on individuals based on their income, including wages, salaries, and investment income.

Trade Deficit

A condition in which a nation's expenditures on imported goods and services surpass its income from exports, leading to a trade deficit.