You are the Minister of Trade for a small island country with the following annual PPC:
You are negotiating a trade agreement with a neighboring island with the following annual PPC: 
If you offer to give the other island 1 coconut for every 4 fish they give you, then they will:
A. refuse your offer because they have a comparative advantage in fish.
B. accept your offer because their opportunity cost of a coconut is greater than 4 fish.
C. accept your offer because your opportunity cost of a coconuts is less than 4 fish.
D. refuse your offer because they can produce as many coconuts as you can.
Answer: B
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Unions can only achieve wage gains by sacrificing employment
a. True b. False Indicate whether the statement is true or false
Ricardian Equivalence maintains that an increase in government spending financed by debt will result in a corresponding increase in
a. savings, in anticipation of future taxes. b. output and consumption, stimulated by the additional government spending. c. consumer spending, in anticipation of lower future taxes. d. aggregate demand, because the additional spending was financed by borrowing rather than current taxation.
As the price level rises, the exchange rate
a. falls, so exports rise and imports fall. b. falls, so exports fall and imports rise. c. rises, so exports rise and imports fall. d. rises, so exports fall and imports rise.
Suppose the price of one euro is fixed at $1.00. A Dutch oil company discovers new oil reserves in the North Sea and offers the oil for sale. If a flexible system is allowed, then what is the impact on the foreign exchange rate?
a. A dollar becomes worth one euro. b. The euro depreciates relative to the dollar. c. A dollar becomes worth two euros. d. The euro appreciates relative to the dollar.