Question 1

What is David Ricardo's contribution?

Question 19 options:

A. He wrote books opposing the ideas of Adam Smith.

B. He wrote An Inquiry into the Nature and Causes of the Wealth of Nations.

C. He was the founder of modern economics.

D. He argued in favour of Britain following a free-trade policy.

Question 2

Which statement does NOT accurately outline an implication of our model of trade?

Question 20 options:

A. Trade allows for specialization.

B. Trade can only occur if the cost of labour in both countries is equal

C. Trade is good for nations.

D. Trade is based on comparative advantage.

Question 3

The country of Freedonia has a GDP of $4000, consumption of $1500, and government purchases of $900. What does this situation imply?

Question 30 options:

A. Investment plus net exports is equal to $2400.

B. Investment is equal to -$1600.

C. Saving is equal to -$2400.

D. Investment plus net capital outflow is equal to $1600.

Question 4

Which statement is consistent with an appreciation of the dollar?

Question 4 options:

A. Canadian goods become more expensive relative to foreign goods, which makes exports fall and imports rise.

B. Canadian goods become less expensive relative to foreign goods, which makes exports fall and imports rise.

C. Canadian goods become less expensive relative to foreign goods, which makes exports rise and imports fall.

D. Canadian goods become more expensive relative to foreign goods, which makes exports rise and imports fall.

Question 5

Which statement best predicts the effects of a fall in the Canadian real interest rate that would prevail in the absence of trade?

Question 5 options:

A. Owning Canadian assets becomes less attractive, and net capital outflow rises.

B. Owning Canadian assets becomes less attractive, and net capital outflow falls.

C. Owning Canadian assets becomes more attractive, and net capital outflow falls.

D. Owning Canadian assets becomes more attractive, and net capital outflow rises.

Question 6

How does a change in government budget as a result of a change in government expenditure affect national saving?

Question 6 options:

A. A decrease in budget deficit does not affect national saving.

B. An increase in budget deficit increases national saving.

C. An increase in budget surplus increases national saving.

D. A decrease in budget surplus increases national saving.

Question 7

If the government of Colombia implemented a policy that reduced national saving, which statement would best predict the consequences?

Question 7 options:

A. Its real exchange rate would appreciate, and Colombian net exports would rise.

C. Its real exchange rate would depreciate, and Colombian net exports would rise.

C. Its real exchange rate would depreciate, and Colombian net exports would fall.

D. Its real exchange rate would appreciate, and Colombian net exports would fall.