A. Absolute advantage
B. Comparative advantage
C. Physical advantage
D. Which way the wind blows
Related Mcqs:
- The classical trade theories of Smith and Ricardo predict that ?
A. Countries will completely specialize in the production of export goods
B. Considerable trade will occur between countries with different levels of technology
C. Small countries could obtain of the gains from trade when trading with large countries
D. All of the above - The Heckscher-Ohl in model rules out the classical model’s basis for trade by assuming that _________ is (are) identical between countries?
A. factor endowments
B. factor intensities
C. technology
D. opportunity costs - The comparative advantage model of Ricardo was based on ?
A. intraindustry specialization and trade
B. interindustry specialization and trade
C. demand conditions underlying specialization and trade
D. income conditions underlying specialization and trade - David Ricardo’s theory in favor of free trade uses the ideal of ?
A. absolute advantage
B. mutual advantage
C. multilateral advantage
D. comparative advantage - The Keynesian model is a good guide to ____ behavior and the classical model describes behavior in ______?
A. long run, short run
B. flexible imperfect markets
C. short-term long run
D. long run, imperfect markets - When free trade areas are set up the member countries trade with each other grows faster than their trade with other countries This is due to what economist call ?
A. trade diversion
B. trade channeling
C. trade creation and trade diversion
D. trade creation - According to the Classical theory of international trade ?
A. Only countries with low wages will export
B. Only countries with high wages will import
C. Countries with high wages will have higher prices
D. All of the above are false - According to classical models, the level of employment is determined primarily by ?
A. the level of aggregate demand for goods and services.
B. prices and wages
C. interest rates
D. the quantity of money - The classical model of macroeconomics assumes ?
A. wages and prices are sticky
B. wages and prices are flexible
C. the economy may operate below full capacity
D. the economy is always at full capacity
E. A and C
F. B and D - Expansionary fiscal policy in the classical model will cause aggregate demand to _______ potential output?
A. exceeds
B. fall below
C. fluctuate around
D. remain equal to
