Assume that Fiji is producing at a point on its PPF. Specify whether the following events will cause a movement to another point along the frontier or a movement to a point within the frontier:

a) Truck drivers block highways in protest against lower speed limits for trucks.

b) Nurses strike for higher pay and better working conditions.

c) Producers produce less meat and more grains.

d) A law is passed to prohibit women or men from entering some occupations.

e) The government spends less on defense and more on education.

f) High unemployment benefits discourage school-leavers from working.

2. 'Even if it were possible, a government policy of spending as much money as may be required to prevent all crimes wouldn't be an efficient use of resources.' Is this statement valid? Explain.

3. 'A nation of self-sufficient families is a nation whose production will tend to fall short of its PPF'. Do you agree? Explain why or why not.

4. What effects will the following have on the rate of growth of Fiji's potential GDP? Assume ceteris paribus.

a) The educational attainment of the average Fiji Islander is rising steadily over time.

b) An increase in soil degradation problem reduces the capacity of more and more farmlands to sustain agricultural crops.

c) There is an ever growing stock of factories, machinery and other capital goods.

d) There is a rapid pace of technological progress.

5. Is a high real GDP growth an unmixed blessing? Why or why not?

6. Why are expenditures on intermediate goods not included as a component of GDP?

7. Would GDP per capita comparisons across countries accurately indicate their relative levels of the standard of living and economic welfare?

8. Why does aggregate income equal aggregate expenditure and the value of output (GDP)?

9. What is the distinction between real GDP and trend GDP?

10. What is the distinction between government expenditures of goods and services and transfer payments?