1. What is the difference between a trade deficit and trade surplus? Provide a realistic example for each. Does the United States economy operate at a trade deficit? Justify your answer.

2. Describe Pre-1930s conventional wisdom. How does this theory differ from Keynesian economics? Provide a detailed discussion.

3. What is the difference between Monetary and Fiscal Policy? Describe how these tools are used to improve the economy. Explain what is meant by the business cycle. What is the highest and lowest point on the business cycle? Describe the difference between recessions and expansions.

4. What constitutes long-run economic growth? What is the key statistic used to measure economic growth? Explain four different sources of comparative advantage. Provide a detailed discussion for each source.

5. The United States is an open economy. What does this mean? Why is international trade important? Describe what is meant by comparative advantage. How does comparative advantage relate to international trade?