Which of the following is a correct inference from Adam Smith's theory of absolute advantage?
A) There is no virtue in a large volume of trade. Rather, policies should be implemented to maximize exports and minimize imports.
B) It is in a country's best interests to maintain a trade surplus, to export more than it imports.
C) Trade is a zero-sum game in which a gain by one country results in a loss by another.
D) A country that has an absolute advantage in the production of all goods might derive no benefits from international trade.
E) Trade is a positive-sum game in which all countries that participate realize economic gains.
Correct Answer:
Verified
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