Suppose that a country has a comparative advantage in agricultural products. When trade occurs, the nominal and real prices of the agricultural good will:
A) both fall.
B) both rise.
C) both remain constant.
D) The nominal price will fall and the real price will rise.

Question

Quizplus · Accepted Answer

When a country has a comparative advantage in a good and begins to trade, the demand for that good increases on the global market, leading to an increase in both the nominal and real prices of the good.

Suppose That a Country Has a Comparative Advantage in Agricultural