Suppose England Has a Comparative Advantage Over the United States

question 66

Multiple Choice

Suppose England has a comparative advantage over the United States in producing tea.If this is true,then:

• A) England should produce more tea than it wants and sell the rest to the United States.
• B) England should produce a small amount of tea and buy the rest of the tea it wants from the United States.
• C) England should not produce tea, and should instead buy it all from the United States.
• D) the United States has nothing to gain from buying tea from England.

---

Definitions:

Hyperinflation

An extremely high and typically accelerating inflation rate, causing a rapid erosion of currency's value.

Deflation

A decrease in the general price level of goods and services, often characterized by the increase in the value of money.

Disinflation

Disinflation is the process of slowing down the rate of inflation, indicating a reduction in the speed at which the general level of prices for goods and services is rising.

Wage-Price Spiral

A macroeconomic concept describing a situation where rising wages lead to increased prices, which in turn lead to demands for higher wages, thus perpetuating inflation.