1. The amount of one currency required to trade for one unit of another country’s currency is known as the exchange rate.

A) True

B) False

2. For two nations to benefit from trade requires each nation have comparative advantage in the production of one good.

A) True

B) False

3. An individual or nation is said to have absolute advantage over another entity in producing a good when:

A) More of that good can be produced with added resources

B) More of that good can be produced with the same amount of resources

C) The quality of their production is superior

D) The opportunity cost of producing the good is higher

E) The opportunity cost of producing the good is lower

4. For two nations to benefit from trade requires each nation have absolute advantage in the production of one good.

A) True

B) False