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Assume Country X has comparative advantage in the production of clothing. If the value of this...

Assume Country X has comparative advantage in the production of clothing. If the value of this country’s currency increases, _____.

a. its comparative advantage will decrease

b. its comparative advantage will stay the same

c. its comparative advantage will increase

d. an absolute advantage will be created

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Ans (a) Assume Country X has comparative advantage in the production of clothing. If the value of this country’s currency increases its comparative advantage will decrease because its needs to spend more amount on factors of production.

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