If all prices in one country (country A) are higher than all prices in another country (B) when compared at the wage rates that happen to prevail in the two countries. If the countries share the same currency and the nominal wage rate in country B remains fixed ________.
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Theories of international trade has come up 151 times in 6 exams since 2006.
This question is on Absolute and comparative advantage, part of Theories of international trade in International Economics.
Why countries trade: producing more cheaply in absolute terms, or at lower opportunity cost.
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Question from the UoH 2020 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.