Author Question: Gains from trade A) result in being able to consume beyond the trading individuals' production ... (Read 321 times)

WWatsford · **on:** Jun 29, 2018

Gains from trade

A) result in being able to consume beyond the trading individuals' production possibilities frontiers.
B) occur when one party to the trade has an absolute advantage in both goods.
C) occur when people do not specialize.
D) occur when opportunity costs are equal.
E) always benefit one party but not the other party of any trade.

Question 2

Explain what is meant by a revaluation of a currency. Under what circumstances would a country devalue its currency?

What will be an ideal response?

mbcrismon · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

A

Answer to Question 2

In a fixed exchange rate system, a country faces a balance of payments surplus when the demand for its currency exceeds the supply at the fixed exchange rate. The country can increase the value at which the currency is pegged to reduce its net exports; this is called a revaluation. The opposite would be the case for a devaluation.