Question 1

By reducing its unemployment rate, Sierra Leone was able to produce more diamonds and more dried fish without making less of anything. Use a PPF graph to illustrate the change that occurred in this scenario.

Question 2

After investing in new mining equipment and roads, Jamaica was able to increase its production of coffee and bauxite. Use a PPF graph to illustrate the change that occurred in this scenario. (Hint: The graph for this problem should look different from the graph for the previous problem.)

Question 3

Suppose that a country's HDI value increased and its real GDP per capita decreased in the same year. What could cause the HDI to increase despite a decrease in real GDP per capita? Is it common to see the HDI and real GDP per capita move in opposite directions? Explain your answer.

Question 4

True or false: An increase in the money supply is among the most effective ways to promote economic growth. Explain your answer.

Question 5

Which of the following is an example of foreign direct investment?

1. You buy bonds sold by the government of Belize.
2. You buy stock in BP, a British company.
3. You buy a cheese factory in Wisconsin.
4. You buy a winery in France.