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Questions and Answers
What is the primary reason nations engage in international trade?
What is the primary reason nations engage in international trade?
- To gain an absolute advantage over other nations
- To increase their imports and reduce their exports
- To specialize in the production of goods and services in which they have a comparative advantage (correct)
- To reduce the number of goods and services produced domestically
If a country exports more goods than it imports, what is the result?
If a country exports more goods than it imports, what is the result?
- Trade deficit
- Net exports
- Trade surplus (correct)
- Balance of trade
What is the main difference between absolute and comparative advantage?
What is the main difference between absolute and comparative advantage?
- Absolute advantage is the ability to produce a specific product more cheaply than any other nation, while comparative advantage is the ability to produce a specific product more efficiently than any other nation.
- Absolute advantage is the ability to produce a specific product more efficiently than any other nation, while comparative advantage is the ability to produce a specific product more quickly than any other nation.
- Absolute advantage is the ability to produce a specific product more efficiently than any other nation, while comparative advantage is the ability to produce a specific product more cheaply than any other nation.
- Absolute advantage is the ability to produce a specific product more efficiently than any other nation, while comparative advantage is the ability to produce a specific product more efficiently than any other product. (correct)
What is the term for the difference between the value of exports and imports?
What is the term for the difference between the value of exports and imports?
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What is the concept that illustrates the idea that nations should specialize in producing goods and services in which they have a comparative advantage?
What is the concept that illustrates the idea that nations should specialize in producing goods and services in which they have a comparative advantage?
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