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The Simple Comparative Advantage Model Assumes That Trade Does Not

Question 77

Multiple Choice

The simple comparative advantage model assumes that trade does not change a country's stock of resources or their utilization efficiency.If we relax this assumption to make allowances for dynamic changes,all of the following become apparent except:


A) opening the economy to trade would be likely to generate dynamic gains.
B) free trade may increase the country's stock of resources.
C) free trade might increase the efficiency with which the country uses its resources.
D) dynamic gains will cause the country's PPF to shift inward.

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