According to the Theory of Trade, If Two Countries Trade

question 106

Multiple Choice

According to the theory of trade, if two countries trade with each other:

• A) consumption in one country will fall and wages in that country will also fall.
• B) wage costs will remain low if both countries specialize in producing the goods for which they have a comparative advantage.
• C) trade raises labor productivity and wages of both countries.
• D) wages in the country with a comparative advantage will rise and wages in the country without a comparative advantage will fall.

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Definitions:

Working Memory

A cognitive system that temporarily holds information available for processing and is essential for reasoning and the guidance of decision-making and behavior.

Retrieval Cue

A stimulus that allows for the recall of information stored in the long-term memory.

Tip-Of-The-Tongue

A cognitive phenomenon where a person cannot recall a specific word or fact despite feeling that retrieval is imminent.

Flashbulb Memory

Highly detailed and vivid memories of momentous events, which are often remembered with high confidence but not always with accurate detail.