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Asked by Varuna Sharma on Jun 23, 2024

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For any pair of countries, there is only one single exchange rate that can lead automatically to both countries realizing the gains from specialization and comparative advantage.

Exchange Rate

The exchange rate determining the worth of one currency in a different currency.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than others, leading to specialized production and trade benefits.

Specialization

The practice of focusing effort and resources on a specific task, area of knowledge, or market segment to increase efficiency and proficiency.

  • Analyze the assortment of exchange rates that promote advantages in trade stemming from comparative advantage.
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Romain Vianney Obame NdoutoumeJun 30, 2024
Final Answer :
False
Explanation :
Exchange rates can fluctuate due to market forces, and there can be multiple exchange rates (official, black market, etc.) between countries. The realization of gains from specialization and comparative advantage depends on various factors, including trade policies, not just the exchange rate.

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