Subject - Economics:

Macroeconomics

MCQ - 1-4011

Question:

Which of the following statements is true of production possibility curves and trade between nations?

Nations specialize and trade based on absolute advantage in production.
Free trade allows each nation to consume beyond the production possibility curve.
The flow of goods and services is based on the principle of absolute advantage.
Free trade allows each nation to consume beyond the production possibility curve.
Tariffs and quotas divert resources from the inefficient producers of a good to the efficient producers of that good

Correct Answer: B

Explanation:

The gains from free trade are based on the principles of comparative, not absolute, advantage and specialization. Free trade allows nations to consume at points beyond their own PPC. In this way, free trade improves the economic well-being of trading nations. Tariffs inhibit the flow of free trade and promote inefficiency.

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269 MCQ for effective preparation of the test of Macroeconomics of Economics section.

Read the MCQ statement: Which of the following statements is true of production possibility curves and trade between nations? , keenly and apply the method you have learn through the video lessons for Macroeconomics to give the answer. Record your answer and check its correct answer and video explanation for MCQ No. 1-4011.

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Solve the question for MCQ No. and decide which option (A through D/E) is the best choice to answer the MCQ, then click/tap the blue button to view the correct answer and it explanation.

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