Assume that a worker in England can produce either 10 units of organic grain or 2 units of incense per year, and a worker in New Zealandcan produce either 5 units of organic grain or 15 units of incense per year. Now suppose there are 10 workers in England and 20 workers inNew Zealand. Right now, the two countries do not trade. England produces and consumes 50 units of grain and 10 units of incense per year.New Zealandproduces and consumes 100 units of grain and no incense per year. The combined output of the two countries is therefore 150 units of grain and 10 units of incense per year. If the two countries decided to trade and completely specialize in producing the good for which each has a comparative advantage, what would the combined yearly output of the two countries be?

a.50 units of grain and 40 units of incense

b.100 units of grain and 300 units of incense

c.150 units of grain and 20 units of incense

d.200 units of grain and 150 units of incense

Which of these events would most likely decrease the price of a new house in British Columbia?

a.higher wages for carpenters, lower wood prices, reductions in consumer incomes, lower apartment rents, decreases in population, and expectations of lower house prices in the future

b.lower wages for carpenters, lower wood prices, decreases in consumer incomes, lower apartment rents, decreases in population, and expectations of lower house prices in the future

c.higher wages for carpenters, higher wood prices, increases in consumer incomes, higher apartment rents, increases in population, and expectations of higher house prices in the future

d.lower wages for carpenters, higher wood prices, decreases in consumer incomes, higher apartment rents, decreases in population, and expectations of higher house prices in the future

Mike's old Metal Fabrication shop has an agreement with its workers to completely index the wages of its employees to inflation in the CPI. They currently pay their production line workers $20 an hour and are scheduled to index their wages today. If the CPI is currently 168.0 and was 140.0 a year ago, by how much should they increase the hourly wages of their workers?

a.$0.58

b.$0.65

c.$2.00

d.$4.00

e.none of the above

What is NOT included in GDP?

a.services such as those provided by banks and insurance companies

b.volunteer work with a local charity

c.final goods that are produced but not sold by the end of the year

d.production of foreign citizens living in Canada

Why does expenditure equal income?

a.because firms are required by law to pay out all their revenue as income to someone

b.because ultimately firms are owned by households

c.because for every sale there is a buyer and a seller

d.because the demand and supply of goods and services must be equal

e.all of the above