13.The following production possibilities schedule shows the quantities of wheat and rice that can be produced in Canada and India with one unit of equivalent resources.

Canada:

Rice (bushels): 13

Wheat (bushels): 7

India:

Rice (bushels):5

Wheat (bushels):13

To achieve the potential gains from international trade,

A) India should produce both wheat and rice and not trade with Canada

B) India should export wheat to Canada and import Canadian rice

C) India should exclude wheat from its consumption

D) India should export rice to Canada and import Canadian wheat

14.What would happen to the risk premium on corporate bonds if brokerage commissions were increased in the corporate bond market?

A)Higher brokerage commissions for corporate bonds would only increases the cost of buying and selling the bonds, which would have no impact on the risk premium

B)None of the choices

C)Higher brokerage commissions for corporate bonds would make them less liquid and thus decrease demand, which would raise the risk premium

D) Higher brokerage commissions for corporate bonds would make them less desirable to hold and thus decrease demand; consequently, this would raise the interest rate and thus raise the risk premium

15.Which of the following statements if true?

A)the real exchange rate is the nominal rate adjusted for GDP differences at home and abroad

B)The interest rate parity condition shows that the home country currency is expected to appreciate if the domestic interest rate is higher then foreign interest rate

C) Fixed exchange rates do not let countries have independent monetary policy

D) Flexible exchange rate provide a more certain environment for business planning