Questions: Saved Which example demonstrates Jeffrey Sachs's argument about trade? Multiple Choice The true GNI of an eastern European country is unknown because of the "hidden economy." A South American nation exports rice but imports wheat because it is more cost effective. The soil conditions in a European country are so poor that no crops can be grown and the country must import all food sources. The citizens of a country in Central America fail to participate in entrepreneurial activity because of the planned economy. Intellectual property rights are well-protected in westernized nations, which provides an absolute advantage.

The answer is: A South American nation exports rice but imports wheat because it is more cost effective.

Explanation for each option:

1. The true GNI of an eastern European country is unknown because of the "hidden economy."

   • This option does not directly relate to Jeffrey Sachs's arguments about trade. It discusses the issue of hidden economies and their impact on Gross National Income (GNI), which is a different economic concept.

2. A South American nation exports rice but imports wheat because it is more cost effective.

   • This option aligns with Jeffrey Sachs's arguments about trade, particularly the concept of comparative advantage. Sachs often discusses how countries benefit from specializing in the production of goods for which they have a comparative advantage and trading for other goods. This example demonstrates a country optimizing its resources by exporting rice, which it can produce more efficiently, and importing wheat, which is more cost-effective to buy from other countries.

3. The soil conditions in a European country are so poor that no crops can be grown and the country must import all food sources.

   • While this option touches on the necessity of trade due to environmental constraints, it does not specifically illustrate Sachs's arguments about the benefits of trade based on comparative or absolute advantage. It focuses more on a lack of resources rather than the strategic economic decisions behind trade.

4. The citizens of a country in Central America fail to participate in entrepreneurial activity because of the planned economy.

   • This option addresses the impact of economic systems on entrepreneurship rather than trade. It does not directly relate to Sachs's arguments about the benefits and strategies of international trade.

5. Intellectual property rights are well-protected in westernized nations, which provides an absolute advantage.

   • This option discusses the protection of intellectual property rights and their role in providing an absolute advantage. While it is related to economic development, it does not specifically demonstrate Sachs's arguments about trade practices and comparative advantage.

In summary, the second option best exemplifies Jeffrey Sachs's argument about trade by illustrating how a country can benefit from specializing in certain products and trading for others to maximize economic efficiency.