Use the Following to Answer Questions

question 204

Multiple Choice

Use the following to answer questions:
-(Scenario: Countries A and B) Use Scenario: Countries A and B.If countries A and B both specialize and trade:

• A) only country A will gain.
• B) only country B will gain.
• C) country A and country B will gain if they both specialize in the good in which they have a comparative advantage.
• D) neither country will gain.

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Definitions:

Speculative Motive

The speculative motive is the desire to hold cash or other assets with the expectation of making a profit from fluctuations in their price or value.

John Maynard Keynes

A British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments.

Classical Economists

Economists from the 18th and 19th centuries who focused on free markets, the role of competition, and the importance of limiting government intervention in the economy.

Say's Law

A principle stating that supply creates its own demand, meaning that production of goods and services creates an equivalent purchasing power in the economy.