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Match the correct economic term with each scenario. Absolute advantage currency appreciation currency depreciation outsourcing specialization comparative advantage

User Jonhoare
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1) One unit of a currency buys more units of another currency than it did previously. = currency appreciation

Explanation: The exchange rate is the exchange value between currencies and may vary according to the transactions that occur in the financial market. When one currency appreciates against another, it means that the valued currency may buy more than the other currency.

2) a company contracts with another company to design its website. = Outsourcing

Explanation: Outsourcing is the transfer of a service to a third company hired by the parent company. For example, instead of hiring a housekeeping team, a real estate company hires a third party company that specializes in providing cleaning services. Thus, the real estate company will not have employment with the janitors.

3) a country or an individual concentrates all its productive efficiency on producing limited goods.= specialization

Explanation: In international trade, the absolute advantage is the ability of a country or region to produce a particular good or service at a lower cost per unit than any other entity producing the same good or service. This makes the country that has absolute advantage concentrate all its productive efficiency in the manufacture of this unique good.

4) Lisa can produce more pens than Tim with the same number of inputs.= comparative advantage

Explanation: Comparative advantage, also called relative advantage, reflects the relative opportunity cost, that is, the relationship between the quantities of a particular good that two countries / people need to stop producing to concentrate their production on another good. If Lisa can produce more pens than Tim with the same number of entries, it means she has a relative advantage over Tim.

User Arun Kamboj
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