1: Answer the following questions regarding international trade: (a) What is the common myth regarding the benefits from international trade? (b) What is the associated implication arising from this myth? (c) What is the true benefit from international trade? Q2: Suppose that a hypothetical economy has the following relationship between its real domestic output and the input quantities necessary for producing that level of outout Input quantity. Real domestic output 400. 800 300. 600 100. 200 (a) What is the level of productivity in this economv? (b) What is the unit cost of production if the price of each input is $2.00? (c) If the input price decreases from $2 to $1.50, what is the new per unit cost of production? What impact would this have on the short-run aggregate supply curve? (d) Suppose that instead of the input price decreasing, the productivity had increased by 25%. What will be the new unit cost of production? What impact would this change have on the short-run aggregate supply curve? Q3: The total demand for money is equal to the transactions demand plus the asset demand for money. (a) Assume that each dollar held for transactions purposes is spent on the average five times per year to buy final goods and services. If nominal GDP is $1,000 billion (or $1 trillion), what is the transactions demand? (ba he table below shows the asset demand a+ certain rates of interest. Using your answer to part (a), complete the table to show the total demand for money at various rates of interest. Interest rate( in %). Asset demand (billions) 10. $30 8. 60 6. 90 4. 120 (c) If the money supply is $260 billion, what will be the equilibrium rate of interest? (d) If the money supply rises, will the equilibrium rate of interest rise or fall? (e) If GDP rises, will the equilibrium rate of interest rise or fall