7 8 9_20 jun part2

If country A has an absolute advantage over country B in the production of a particular product, it can produce that product ...........

• with lower inputs per unit

• in greater absolute quantities

• with a comparative advantage

• at a lower opportunity cost of production

The comparative advantage theory states that ...........

• Benefits can be gained through specialization in the product with the highest productivity

• benefits can be gained from importing cheap goods in the international market

• international trade can exist when prices in two countries change

• international trade will always benefit two countries equally

The terms of trade reflect the ..........

• difference between invisible imports and invisible exports

• ratio at which nations will exchange two types of goods

• gains from trade that will be equally divided

• none of the abve

Suppose that countries A and B specialize in the producing wheat and palm oil respectively. After the trade Country A exports 300 tons of wheat and imports 100 tons of palm oil from Country B. The terms of trade are

• 1:3 wheat to palm oil

• 3 :1 wheat to palm oil

• 1 : 1/3 wheat to palm oil

• cannot be determined

An excess demand for ringgit in the floating exchange rate system will lead to ............... of the ringgit

• a depreciation

• an appreciation

• a long term surplus

• a long term shortage

According to the Keynesian theory, a contraction in money supply tends to ............ interest rate and ................. investment , aggregate demand, prices , real gdp and employment

• decrease; decrease

• decrease; increase

• increase; decrease

• increase; decrease

The central bank should implement contractionary monetary policy reduce inflation by

• increasing the discount rate

• decreasing the discount rate

• decreasing the required reserve ratio

• buying government securities in open market operation

the goal of expansionary monetary policy is

• to have an equal distribution of income

• to decrease interest rates

• to decrease price levels

• to increase the level of aggregate output

Which of the following will lead to an increase in demand for money

• an increase in the level of national income

• a decrease in the price level

• a decrease in money supply

• an increase in the interest rate

Suppose Philip transfers USD1000 from his checking account to his saving account. How does this action affect the M1 and M2 money supplies?

• Both M1 and M2 will fall by USD1000

• M1 will fall by USD1000, while M2 will be unchanged

• M1 will be unchanged and M2 will rise by USD1000

• Both M1 and M2 will increase by USD1000