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Economics (AS & A Level) · Oct / Nov 2021 · Paper 12 · Question 19

9708The reasons for international trade

Compared with Pakistan, Germany has a higher output of pharmaceuticals per unit of resources used. What could explain this?

  1. Athe existence of floating exchange rates
  2. Bthe law of absolute advantage
  3. Cthe Marshall–Lerner condition
  4. Dthe terms of trade

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Correct answer: B. the law of absolute advantage

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