Which of the Following Must Be True in Order to Engage

question 93

Multiple Choice

Which of the following must be true in order to engage in advantageous international trade?

• A)It must be producing at a point on its production possibilities frontier.
• B)It must be economically efficient.
• C)It must have a comparative advantage in producing one of the goods being traded.
• D)There must be no potential Pareto improvements available in the economy.
• E)It must have an absolute advantage in producing one good being traded.

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Definitions:

Aggregate Expenditure Line

A relationship tracing, for a given price level, spending at each level of income, or real GDP; the total of C + I + G + (X - M) at each level of income, or real GDP.

Marginal Propensity

The ratio of the change in consumption to the change in income, indicating how much consumption will change with a change in income.

Real GDP

The measure of a country's economic output adjusted for price changes, providing a more accurate reflection of an economy's size and growth.

Inventory Adjustments

Changes made to the recorded amount of inventory to account for discrepancies, damages, losses, or theft.