Question

I am stuck on these two:

The General Agreement on Tariffs and Trade (GATT)

Group of answer choices

Encourages trade restrictions.

Committed GATT members to a reduction of protectionism.

Established the European Common Market.

Has now eliminated all nontariff barriers to trade.

Assume the United States and Australia have the same amount of resources. In a given time period, the United States can produce 2 tons of beef or 200,000 cars. Australia can produce 1 ton of beef or 100,000 cars. This means that

Group of answer choices

Australia has a comparative advantage in cars.

The United States has a comparative advantage in beef.

Australia has an absolute advantage in both beef and cars.

The United States has an absolute advantage in both beef and cars.

Answer 1

1. The General Agreement on Tariffs and Trade (GATT) Option B (Committed GATT members to a reduction of protectionism.) is correct.

Reason: GATT is formed to reduce the trade restriction and to promote globalization. The aim of GATT is to reduce the barrier of trade within their member countries.

2. Assume the United States and Australia have the same amount of resources. In a given time period, the United States can produce 2 tons of beef or 200,000 cars. Australia can produce 1 ton of beef or 100,000 cars. This means that: Option D (The United States has an absolute advantage in both beef and cars) is correct.

Reason: US and Australia both have the same opportunity cost in producing beef and cars. But US is producing more and therefore has more absolute advantage.