In which situation must domestic saving equal investment?

a.

when NX is zero

b.

when imports are zero

c.

when NX is negative

d.

when NCO is negative

For two people who are planning to trade two different goods, when will there NOT be a comparative advantage for either?

a.

if they have agreed in advance on who will produce what and how much each will produce

b.

if they have exactly the same opportunity cost

c.

if one person has an absolute advantage in both products

d.

if the terms of trade are such that neither can gain from trade

If a Canadian shirt-maker purchases cotton from Egypt, which of the following correctly identifies the effects of this transaction?

a.

Canadian net exports decrease, and Canadian net capital outflow increases.

b.

Canadian net exports increase, and Canadian net capital outflow decreases.

c.

Canadian net exports increase, and Canadian net capital outflow increases.

d.

Canadian net exports decrease, and Canadian net capital outflow decreases.