The basis for free trade is the concept of
A) absolute advantage.
B) differences in natural resources and climate.
C) differences in nominal wages.
D) comparative advantage.
Question 2 - All countries in the European Union use the euro as their currency.
Indicate whether the statement is true or false
Question 3 - Domestic firms operating abroad may find it economically beneficial to adopt environment-friendly standards because
A) foreign nations may be upset if firms do not use the environment-friendly technology.
B) the least-cost strategy usually involves the adoption of one set of environment-friendly technology rather than multiple standards.
C) they may be forced to replace the old technology whenever the foreign country experiences positive economic development.
D) their environment-unfriendly technology may be replaced by foreign-based technology.
Question 4 - When aggregate demand meets aggregate supply in the vertical portion of the aggregate supply curve,
A) an increase in demand will cause prices to rise but no change in output.
B) an increase in demand will cause output to rise but no change in prices.
C) an increase in demand will cause prices to fall but no change in output.
D) an increase in demand will cause output to fall but no change in prices.
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