Gains from Trade and Comparative Advantage Theory

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What is an example of a free trade area?

NAFTA

European Union

ASEAN (correct)

WTO

Which of the following is an example of a customs union?

ASEAN

ECOWAS

SAARC

MERCOSUR (correct)

What does FOB stand for in transportation terms?

Final Order Billing

Free On Board (correct)

Freight On Board

Forward Onward Bound

Which economic trading bloc requires a full economic union among its members?

Economic Union Signup and view all the answers

What is the term used for unethical behavior like cheating in academics?

Academic Dishonesty Signup and view all the answers

Which bloc is known for promoting regional economic cooperation among Southeast Asian countries?

ASEAN Signup and view all the answers

What is the impact of a trade deficit on job creation and economic growth?

Generally hurts job creation and economic growth Signup and view all the answers

Which two countries are mentioned as having a trade surplus in the text?

China and Germany Signup and view all the answers

What is the primary function of the foreign exchange market as mentioned in the text?

To convert currency between countries Signup and view all the answers

How many currencies are directly convertible with the Philippine peso according to the text?

19 currencies Signup and view all the answers

Which country is highlighted as a trade deficit economy in the text?

United States Signup and view all the answers

What is the potential impact of unpredictable changes in exchange rates?

Adverse consequences on economies Signup and view all the answers

According to the theory of comparative advantage by David Ricardo, a country should specialize in the production of a good if it has:

Absolute advantage in producing that good Signup and view all the answers

Which factor contributes to gains from trade as described in the text?

Specialization in production Signup and view all the answers

In the context of trade, what does economies of scale refer to?

Increasing efficiency as production volume increases Signup and view all the answers

Based on the information provided, which country should specialize in rice production?

Ghana Signup and view all the answers

What does the domestic exchange ratio of 1:3 for Country X mean?

One unit of cloth can be exchanged for 3 units of rice within Country X Signup and view all the answers

How does specialization in production lead to gains from trade?

By focusing on producing goods efficiently Signup and view all the answers