Question 1 The term \"economic freedom\" means Question 5 answers the right to o

Question

Question 1
The term "economic freedom" means
Question 5 answers
the right to own financial assets.
the right to own private property.
the right to trade goods and services.
all the above.

Question 2
Data from the World Bank show that economic growth and economic freedom are
Question 6 answers
sometimes positively related and sometimes negatively related.
totally unrelated.
directly related.
inversely related.

Question 3
The principle of comparative advantage essentially states that
Question 7 answers
some goods have high opportunity costs and low absolute costs.
specialization can reduce output rather than increase it.
there are some goods for which the opportunity costs of production are the same regardless of who produces them.
total output of an economic system is greatest when each good is produced by those who have the lowest opportunity cost of producing the good.

Question 4
Restricting imports usually leads to
Question 8 answers
a higher per capita level of real consumption.
a reduction in exports and employment.
a country producing beyond its production possibilities frontier.
a country consuming even further beyond its production possibilities frontier.

Question 5
With a pure gold standard,
Question 9 answers
a balance of payments deficit will lead to an increase in the domestic price level.
there will be a tendency for a too rapid increase in the volume of world trade.
a nation may not pursue an independent monetary policy.
an inflow of gold will reduce the money supply of a country.

Question 6
With the Bretton Woods system of international exchange rates,
Question 10 answers
the value of a country's currency was determined by its stock of gold.
there were fixed exchange rates, and countries were obligated to intervene to maintain the values of their currencies within 1 percent of par value.
the value of a country's currency was determined strictly by the laws of supply and demand.
a nation's balance of payments was eliminated.

Question 7
The balance of trade is defined as
Question 11 answers
the value of goods bought and sold in the world market.
the amount of imported capital assets.
the difference between the import and export of official reserves.
the amount of exported capital assets.

Question 8
Active policymaking refers to
Question 12 answers
policymaking that is carried out in response to a rule.
relying on policies that act as automatic stabilizers.
actions taken by policymakers in response to or in anticipation of some change in the overall economy.
nondiscretionary policymaking.

Explanation / Answer

Question 1 The term "economic freedom" means all the above. Question 5 answers the right to own financial assets. the right to own private property. the right to trade goods and services. Question 2 Data from the World Bank show that economic growth and economic freedom are Question 6 answers directly related. sometimes positively related and sometimes negatively related. totally unrelated. inversely related. Question 3 The principle of comparative advantage essentially states that total output of an economic system is greatest when each good is produced by those who have the lowest opportunity cost of producing the good. Opportunity cost is the cost forgone for next best alternative. When we have a lowest opportunity cost, than the economic cost of producing a product will also be low giving efficient allocation. Question 7 answers some goods have high opportunity costs and low absolute costs. specialization can reduce output rather than increase it. there are some goods for which the opportunity costs of production are the same regardless of who produces them. Question 4 Restricting imports usually leads to a reduction in exports and employment. with trade the production possibilities will increase, as a country will produce only the goods in which it has comparative advantage, so per-capita consumption also increases, Question 8 answers a higher per capita level of real consumption. a country producing beyond its production possibilities frontier. a country consuming even further beyond its production possibilities frontier. Question 5 With a pure gold standard, a nation may not pursue an independent monetary policy. Monetary policy will try to alter the price level and pace of the economy by altering money supply. In gold standard it is not possible. There is no scope for increasing or decreasing money supply arbitarily. It should be done based on gold reserves. Question 9 answers a balance of payments deficit will lead to an increase in the domestic price level. there will be a tendency for a too rapid increase in the volume of world trade. an inflow of gold will reduce the money supply of a country. Question 6 With the Bretton Woods system of international exchange rates, there were fixed exchange rates, and countries were obligated to intervene to maintain the values of their currencies within 1 percent of par value. Question 10 answers the value of a country's currency was determined by its stock of gold. the value of a country's currency was determined strictly by the laws of supply and demand. a nation's balance of payments was eliminated. Question 7 The balance of trade is defined as the difference between the import and export of official reserves. Question 11 answers the value of goods bought and sold in the world market. the amount of imported capital assets. the amount of exported capital assets. Question 8 Active policymaking refers to actions taken by policymakers in response to or in anticipation of some change in the overall economy. Question 12 answers policymaking that is carried out in response to a rule. relying on policies that act as automatic stabilizers. nondiscretionary policymaking.

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