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match each item with its description.

one country's ability to produce a given product relatively more efficiently than another country

a system that relies on supply and demand to determine the value of one currency in terms of another

the difference between money paid to and money received from other nations when engaged in trade

a system under which the values of currencies are fixed in relation to one another

one country's ability to produce more of a given product than another country

answer choices:

absolute advantage
floating exchange rates
fixed exchanged rates
balance of payments
comparative advantage

1. one country's ability to produce a given product relatively more efficiently than another country comparative advantage  

When economy have ability or capacity to create goods at opportunity cost which is lower than the other partners of trade, in this case the economic term which is used is comparative advantage. It enables an organization to sell products and services at a lower cost than its rivals and acknowledge more sale margins.  

2. A system that relies on supply and demand to determine the value of one currency in terms of another floating exchange rates

When the currency cost of a country is set by the Forex advertise which is based on supply and demand in respect to different currencies, this is known as floating exchange rate. In short we can say that change in the value of currency with respect to other currencies.

3. The difference between money paid to and money received from other nations when engaged in trade balance of payments

The record of all international exchange or trade and all the transactions which are made by the resident of any nation or country over a characterized time frame, such as 3 months, 6 months or a year is known as balance of payments . The current account and capital account are two account of transactions which are divided by balance of payments.

4. A system under which the values of currencies are fixed in relation to one another fixed exchanged rates  

When a government fixed the currency rate with respect to the currency of some other country or the rate of gold, that rate fixed exchange rate. When government fixed the exchange rate, it will help government in many ways like it maintain low inflation which keeps the interest rates down.

5. One country's ability to produce more of a given product than another countryabsolute advantage

When an individual, organization or country produce products at a cost which is lower than the production cost and more efficient than other person, organization or country who are producing the same product, this ability is known as absolute advantage.

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