Assume That One Day's Labor in England Can Produce Either

question 137

Multiple Choice

Assume that one day's labor in England can produce either 20 units of cloth or 2 units of wine, while in Portugal, one day's labor can produce either 24 units of cloth or 12 units of wine. If England transfers 2 units of labor from wine to cloth and Portugal transfers 1 unit of labor from cloth to wine, the increase in combined output by those two workers will be

• A)​16 wine, 8 cloth
• B)​16 wine, 16 cloth
• C)​12 wine, 12 cloth
• D)​8 wine, 16 cloth

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Definitions:

Strip Bond

A type of bond investment where the coupon payments and the principal are separated and sold individually as zero-coupon instruments.

Yield Rate

The annual income return on an investment, expressed as a percentage of the investment's price.

Annual Compound Rates

The rate of return that is earned on an investment or paid on a loan when interest is compounded on an annual basis.

RRSP

The Registered Retirement Savings Plan (RRSP) is a Canadian investment vehicle for individuals to save for retirement, with contributions being tax-deductible and growth being tax-deferred.