You are to consider all of the following statements. Determine whether each statement is absolutely True, absolutely False or Uncertain (i.e., ‘it depends’). Then carefully explain why your determination is correct, making sure to define the key terms and relationships you use in your explanation, using graphical analysis where appropriate. 

1. An increase in the price of Canada’s imported commodities, with the price of its exports remaining unchanged, indicates an increase in Canada’s terms of trade and an increase in the gains from trade to Canada. 

2. Income transfers that result in a less unequal distribution of income will result in an increase in aggregate consumption expenditure. 

3. With specialization (based on comparative advantage) and trade, countries can produce at points outside their production possibility frontiers. 

4. Per capita GDP provides an accurate index of a country’s standard of living. 

5. The existence of the net export effect reinforces the counter cyclical impact of fiscal policy stabilization initiatives.