A Rock Carving from Ancient Norway Depicts Two Identical People

question 51

Multiple Choice

A rock carving from ancient Norway depicts two identical people doing different jobs in the same boat: one uses a bow to hunt while the other paddles. How does this early example illustrate the benefits of trade?

• A) One prefers to hunt while the other prefers to paddle the boat; this is an example of diverse preferences.
• B) One learns to be very good at paddling and one learns to be very good at hunting; this is an example of specialization and division of knowledge.
• C) The paddler is stronger than the hunter so the paddler sacrifices a lot by hunting; this is an example of comparative advantage.
• D) There is no trade in this example since no goods are being exchanged.

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Definitions:

Effective Annual Interest Rate

The real return on a savings account or any interest-bearing investment, taking into account the effect of compounding interest.

Interest Rate

The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Short-term Investments

Assets intended to be converted into cash or sold within a year.

Current Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with its short-term assets.