1. Discuss why the short-run aggregate supply curve has a positive slope and the long-run supply curve a vertical line.
2. Explain the binding situation and discuss what happens when there is zero interest rate bound.
3. Is the minimum wage a good policy? Should the government increase the minimum wage or maintain it at its current rate or abolish it altogether.
4. Define trade surplus and trade deficit.
5. What is the theory of comparative advantage?
6. Compare and contrast absolute advantage and comparative advantage.
7. Assume the following information for the United States and Mexico. The United States can produce a maximum of 600 bushels of barley or a maximum of 600 bushels of corn. Mexico can produce a maximum of 200 bushels of barley or 400 bushels of corn. Which country has a comparative advantage in the production of barley? Which country has a comparative advantage in the production of Corn? Show your work for the calculation of opportunity cost.
8. Define Tariffs, export subsidies, quotas, and dumping.
9. Define exchange rate.