Samuelson's example of an analysis of a fall in the relative price of R&D exports leads to a(n) _____ in the terms of trade and a _____ in export volume. Samuelson's point is that a country will be _____ than in the absence of trade.
A) improvement; reduction; better off
B) worsening; reduction; better off
C) worsening; reduction; worse off
D) improvement; reduction; worse off

Question

Quizplus · Accepted Answer

Samuelson's analysis suggests that a fall in the relative price of R&D exports results in a worsening of the terms of trade and a reduction in export volume. Despite this, the country is still better off engaging in trade than not trading at all, as trade allows for specialization and access to a wider market, which overall benefits the economy.

Samuelson's Example of an Analysis of a Fall in the Relative