Question 1

Which type(s)of economies interact with other economies?&#10;A)only closed economies&#10;B)only open economies&#10;C)closed economies and open economies&#10;D)neither closed nor open economies

Accepted Answer

Open economies interact with other economies through trade, investment, and financial exchanges, while closed economies do not engage in such interactions.

Question 2

International trade&#10;A)raises the standard of living in all trading countries.&#10;B)lowers the standard of living in all trading countries.&#10;C)leaves the standard of living unchanged.&#10;D)raises the standard of living for importing countries and lowers it for exporting countries.

Accepted Answer

International trade allows countries to specialize in producing goods and services that they have a comparative advantage in, leading to higher productivity and lower costs. This results in consumers having access to a wider variety of goods at lower prices, which raises their standard of living. This applies to both importing and exporting countries, as they can access goods that they could not produce domestically, leading to a net benefit for all trading countries.

Deck 31: 0: Sec 310 Mc Open Economy Macroeconomics Basic Concepts