The theory of overlapping demand predicts that trade in manufactured goods is unimportant for countries with very different ?
Correct answer: C. Per-capita income levels
- A. Tastes and preferences
- B. Expectations of future interest rate levels
- C. Per-capita income levels
- D. Labor productivities
Explanation
The overlapping-demand theory predicts more manufactured-goods trade when consumers in trading countries have similar purchasing power and product preferences. Very different per-capita incomes imply less overlap in demand.
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