Specialization and Trade Allow a Country to

question 3

Multiple Choice

Specialization and trade allow a country to

• A) produce and consume on its production possibility frontier.
• B) produce and consume inside its production possibility frontier.
• C) produce and consume outside its production possibility frontier.
• D) produce on its production possibility frontier and consume outside it.

---

Definitions:

Exchange Rate

The worth of one currency when converted to another.

Interest Rate

The rate at which a borrower pays interest for the money borrowed from a lender.

Loanable Funds

The total funds available for borrowing in the economy, coming from savings, that are used for investments and consumption.

Interest Rate

The fraction of a loan incurred as interest by the borrower, often depicted as an annual percentage of the outstanding loan amount.