Answer all the questions

Question 1

When a country uses fewer resources than another country, it can be said that the country has a(n)

com ple te advantage

comparative advantage

absolute advantage

apparent advantage

Question 2

Which of the following statements is true about the Keynesian perspective?

aggregate demand is stable and rarely changes

aggregate supply is unstable and can change unexpectedly

aggregate supply is stable and rarely changes

aggregate demand is unstable and can change unexpectedly

Question 3

The following are benefits of tradeexcept

specialization

greater competition

higher prices

more variety of goods and services

Question 4

Which of the following will have an effect on consumption spending?

a change in income

changes in government spending

changes in net export

a change in foreign demand

Question 5

The following statements about the Neoclassical perspective are trueexcept

by the time the government detects a recession and enacts expansionary fiscal policy, the economy may be recovering on its own

the government might make things worse by intervention

the government can make the economy recover faster

the government should focus on reducing the natural rate of unemployment

Question 6

The expenditure multiplier shows how

an initial increase in spending, cycles repeatedly through the economy and has a larger impact than the initial dollar amount spent

an initial increase in spending, has no impact on the economy

an initial increase in spending, cycles repeatedly through the economy and has a smaller impact than the initial dollar amount spent

an initial decrease in spending, cycles repeatedly through the economy and has a larger impact than the initial dollar amount spent

Question 7

According to Neoclassical economists, monetary policy is ineffective because people have

animal spirits

adaptive expectations

flexible expectations

rational expectations

Question 8

According the Keynes, what will increase aggregate demand

a decrease in taxes

a decrease in business confidence

a decrease in credit

a decrease in government spending

Question 9

What is the effect of a tariff?

consumers pay a lower price and tax revenue is generated

producers charge a higher price and tax revenue decreases

producers charge a lower price and tax revenue decreases

consumers pay a higher price and tax revenue is generated

Question 10

A country has a comparative advantage when they can

produce a good or service at a higher opportunity cost

produce a good or service at a lower opportunity cost

produce a good or service using fewer resources than another country

produce a good or service using more resources than another country

Question 11

Neoclassical economists focus on long-term growth rather than the short term because

the government can make the economy recover faster

the economy will adjust on its own

the government works efficiently

fiscal policy is effective in fighting recessions

Question 12

Samoa can produce 50 tons of coconuts or 25 tons of fish in a week. Tonga can produce 40 tons of coconuts or 10 tons of fish in a week. Which of the following statements is true?

Samoa has the comparative advantage in producing fish

Tonga has the absolute advantage in producing coconuts

Tonga has the comparative advantage in producing fish

Samoa has the comparative advantage in producing coconuts

Question 13

Which of the following isnota protectionist policy?

tariffs

import quotas

non tariff barriers

trade agreements

Question 14

According to Keynes, recessions occur because

the economy is past full employment

wages and prices are sticky

wages and prices are flexible

the economy is at full employment

Question 15

One way to fight inflation is through

expansionary fiscal policy

contractionary monetary policy

contractionary municipal bonds

expansionary monetary policy

Question 16

In Ghana, the domestic price of coffee beans is $4.00 per pound. Ghana opens for trade and finds that the world price of coffee beans is $6.50 per pound. Which of the following statements is true?

coffee consumers in Ghana will benefit from trade

foreign producers benefit from trade

coffee producers in Ghana will benefit from trade

foreign consumers lose from trade

Question 17

France can produce 100 bottles of wine or 25 boxes of cheese. Italy can produce 80 bottles of wine or 40 boxes of cheese. What is France's opportunity cost of producing a bottle of wine?

0.5 boxes of cheese

2 boxes of cheese

4 boxes of cheese

0.25 boxes of cheese

Question 18

According to Keynes, the government should intervene during a recession because

the government is slow to detect a recession

wages and prices are flexible

inflation is too high

wages cannot adjust when the economy slows

Question 19

When a country exports a good,

domestic consumers benefit

domestic consumers pay a lower price

domestic producers charge a lower price

domestic producers charge a higher price

Question 20

According to neoclassical economists, the government should not worry about recessions because

the government can make the economy recover faster

people are well off and do not need assistance

wages and prices are sticky

wages and prices adjust quickly

Question 21

A country might want to restrict trade because of

competition is beneficial

trade creates more jobs

they want nurture infant industries and protect them from foreign competition

low income countries have high environmental standards

Question 22

According to the Phillip's curve, when inflation is high, unemployment is

high

rising

the same

low

Question 23

France can produce 100 bottles of wine or 25 boxes of cheese. Italy can produce 80 bottles of wine or 40 boxes of cheese. Which of the following statements is true?

France has the absolute advantage in producing cheese

Italy has the comparative advantage in producing cheese

Italy has the absolute advantage in producing wine

Italy has the comparative advantage in producing wine

Question 24

Sticky wages occur when wages are

falling fast

flexible

unchanging or slow to adjust

quick to adjust

Question 25

In Scotland, the domestic price of wool is $2.25 per pound USD. Scotland opens for trade and finds that the world price of wool is $1.75 per pound USD. Which of the following statements is true?

Scottish producers will want to export their wool

Scottish producers will benefit from trade

Scottish consumers will lose from trade

Scottish consumers will benefit from trade