The figure above illustrates aggregate demand and aggregate ...

[penguins]

The figure above illustrates aggregate demand and aggregate supply in Sparta. Sparta's price level will rise above 100 if ________.
 
  A) government expenditure decreases
  B) the quantity of money increases
  C) the quantity of capital increases
  D) taxes increase

Question 2

Define comparative advantage and discuss its role in international trade.
 
  What will be an ideal response?

[amcvicar]

Answer to Question 1

B

Answer to Question 2

Comparative advantage is the factor that drives international trade. A country has a comparative advantage in the production of a good if the country can produce it at a lower opportunity cost than any other country. Because the cost of production of a good is lower in the nation with the comparative advantage in the good, that country will export the good. The country will then gain by buying the goods from other nations that those nations produce at the lowest opportunity cost, that is, those goods in which the other nations have a comparative advantage.

[penguins]

Excellent

[bulacsom]

Gracias!