A Nation Should Only Import Those Goods for Which It

question 1

Multiple Choice

A nation should only import those goods for which it has

• A)lower opportunity costs than its trading partner
• B)higher opportunity costs than its trading partner
• C)zero transaction costs
• D)lower costs of production than its trading partner
• E)absolute advantage in production compared to its trading partner

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Definitions:

Market

A place or mechanism where buyers and sellers can trade goods, services, securities, or other items of value.

Securities

Financial instruments that represent ownership positions in publicly-traded corporations (stock), creditor relationships with governmental bodies or corporations (bonds), or rights to ownership as represented by an option.

Returns on Stock Investments

The gain or loss made on stock investments, typically expressed as a percentage of the investment's initial cost.

Inflationary Pressures

Situations or factors that lead to an overall increase in prices, reducing purchasing power in an economy.