Author Question: If Country A can produce an extra plane by giving up two boats, and Country B can produce an extra ... (Read 80 times)

Yolanda · **on:** Jun 29, 2018

If Country A can produce an extra plane by giving up two boats, and Country B can produce an extra plane by giving up three boats, then

A) Country A has an absolute advantage in producing planes and a comparative advantage in producing boats.
B) The two countries have no incentive to trade with one another.
C) Country A would like to trade with B, but B cannot gain by trading with A.
D) Country B has a comparative advantage over Country A in the production of planes.
E) Country A has a comparative advantage over Country B in the production of planes.

Question 2

A balance of payments surplus occurs if

A) the supply of a nation's currency is equal to the demand for the currency at the current exchange rate.
B) exports exceed imports.
C) the supply of a nation's currency exceeds the demand for the currency at the current exchange rate.
D) the demand for a nation's currency exceeds the supply of the currency at the current exchange rate.