Australia is a major producer of agricultural and dairy products and e

QUESTION

Australia is a major producer of agricultural and dairy products and exports coffee, tea, spices, and milk products to the United States. United States is the world’s third largest supplier of machinery and exports heavy machinery to Australia.

What explains the trade equation between Australia and the United States?

A. Tariff barriers determine the flow of goods and services between nations.

B. Countries are simultaneously encouraging exports and discouraging imports.

C. First entrants to the industry ensure their nations have the first-mover advantages.

D. Nations with an absolute advantage in producing certain goods trade them for goods produced by other countries.

E. Gold and silver are the mainstays of national wealth and essential to vigorous commerce.

ANSWER

D