5 Questions
What is the primary reason nations engage in international trade?
To specialize in the production of goods and services in which they have a comparative advantage
If a country exports more goods than it imports, what is the result?
Trade surplus
What is the main difference between absolute and comparative advantage?
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.
What is the term for the difference between the value of exports and imports?
Net exports
What is the concept that illustrates the idea that nations should specialize in producing goods and services in which they have a comparative advantage?
Comparative advantage
Test your knowledge of Gross Domestic Product (GDP) and Gross National Product (GNP), including what is included and excluded in each measure. Learn about the differences between GDP and GNP and how they are used to measure economic activity. Understand the importance of GDP in modern economics.
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