The straight-line production possibilities curve
A) does not show increasing opportunity costs.
B) fails to reflect tradeoffs.
C) fails to benefit trading nations.
D) refutes the principles of comparative advantage.
Question 2 - Describe why the European exchange rate mechanism (ERM) was founded and how it worked.
What will be an ideal response?
Question 3 - One reason why the plants of multinational corporations abroad may have better standards than domestic contractors in low-income countries is because multinational corporations tend to reduce costs by using one standard in terms of capital equipment and technology for all markets.
Indicate whether the statement is true or false
Question 4 - Contractionary fiscal policy can lead to a depreciation of the nation's currency.
Indicate whether the statement is true or false
Question 5 - A production possibilities curve that is a straight line represents the case of
A) constant costs.
B) increasing costs.
C) constant opportunity costs but increasing real costs.
D) constant opportunity costs but decreasing real costs.
Question 6 - In the face of capital outflow, countries had to lower interest rates to stay in the ERM.
Indicate whether the statement is true or false
Question 7 - Child labor is a common family survival strategy, especially for farmers in rural areas where it is hard to enforce rules or to reach the poor with any supporting infrastructure or social services.
Indicate whether the statement is true or false
Question 8 - If the government has a 100 million budget deficit, private saving is equal to 500 million, private investment is equal to 300 million, what is the value of the current account in equilibrium?
A) 100 million surplus
B) 700 million surplus
C) 100 million deficit
D) 700 million deficit
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