Economics Gr. 11B

According to the theory of comparative advantage, which of the following is not a reason why countries trade?

• Comparative advantage.

• Costs are higher in one country than in another.

• Prices are lower in one country than in another.

• Exports give a country a political advantage over other countries that export less

The U.S. can produce 50 cars and 25 tools. Peru can produce 20 cars and 15 tools who has the absolute advantage in tools?

• Peru

• U.S.

• neither

• not enough info

Which of the following factors influence trade?

• The stage of development of a product.

• Government.

• The relative price of factors of productions.

• All of the above.

Microeconomics deals with the study of __________economic entities.

• Aggregate

• Individual

• Macro

• Socio

According to the theory of comparative advantage, a country will export a good only if

• It can produce it using less labor than other countries.

• Its productivity is higher in producing the good than the productivity of other countries in producing it.

• Its wage rate in producing the good is lower than in other countries.

• Its cost of producing the good, relative to other goods, is at least as low as in other countries.

Which of the following concept is just opposite to deflation?

• Stagflation

• Inflation

• Recession

What is a stagflation?

• A situation in which the economy experiences recession.

• A situation in which the economy have inflation and recession altogether

• An economy where unemployment is high

• Both 2 and 3

Inflation is a state where price rises and value of money

• Rises

• Falls

• Remains constant

• Becomes zero

Which of the following statements is true?

• GDP measures the value of all the goods and services produced in the economy.

• GDP stands for gross domestic product.

• GDP excludes intermediate goods and services.

• GDP equals wages plus trading profits.

Suppose Countries A and B use only labour as an input and produce only cloth and wheat. In A, a worker in a day could produce 2 units of cloth or 4 units of wheat. In B, a worker in a day could produce 3 units of cloth or 9 units of wheat. At present the countries do not trade. Which of the following statements is false?

• Country A has a comparative advantage in cloth.

• Country A has an absolute advantage in cloth.

• Country B has an absolute advantage in wheat.