The Product Life Cycle Theory Predicts That Comparative Advantage Shifts

question 91

Multiple Choice

The product life cycle theory predicts that comparative advantage shifts away from the country of origin if:

• A)the product is introduced in many countries simultaneously.
• B)the product is highly demanded in international markets.
• C)the demand for the product drastically declines in the domestic market of the country where it was invented.
• D)other countries have lower manufacturing costs using the now-standardized technology.
• E)other countries develop highly skilled labor forces to improve product quality.

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Definitions:

Federal Deficit

The amount by which a government's expenditures exceed its tax revenues over a specified fiscal period, leading to borrowing or the creation of new funds.

Creditor Nation

A country that has invested more in other countries than others have invested in it, leading to a net positive investment position.

Fiscal Policy

Government policies regarding taxation and spending that are aimed at influencing economic conditions, including managing inflation, unemployment, and stimulating economic growth.

Federal Budget Deficit

The financial situation in which the government's expenditures exceed its revenues within a given fiscal year.