1			A hypothetical economy has exports amounting to $26bn and imports amounting to $31bn. The economy has:
			A)	A trade surplus of $5bn
			B)	A trade deficit of $5bn
			C)	A trade surplus of $26bn
			D)	A trade deficit of $31bn
2			Purchases of domestic assets by foreign households and firms is known as:
			A)	Capital inflows
			B)	Capital outflows
			C)	Net capital inflows
			D)	None of the above
3			Which of the following statements is / are true of the production possibilities curve (PPC)? The PPC is typically bowed outward due to the principle of increasing opportunity cost. The PPC assumes that the prices of the products are equal. The PPC assumes that once an efficient combination is attained, you can produce more of one good only by producing more of the other good. The PPC is based on a fixed level of resources and technology.
			A)	Statement 3 only
			B)	Statement 1 and 2
			C)	Statement 1 and 4
			D)	All of the above

Use the following information on a hypothetical economy to answer questions 4 to 6:

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4			The diagram above represents an:
			A)	Open economy
			B)	Closed economy
			C)	Inefficient economy
			D)	None of the above
5			The optimal production level in this economy is represented by:
			A)	Point A
			B)	Point E
			C)	Point F
			D)	Point G
6			At the optimal production level, which of the following statements is / are true? Opportunity cost of producing one more computer = opportunity cost of purchasing one more car Opportunity cost of producing one more car = opportunity cost of purchasing one more computer Opportunity cost of producing one more computer = opportunity cost of purchasing one more computer Opportunity cost of producing one more car = opportunity cost of purchasing one more car
			A)	Statement 1 only
			B)	Statement 1 and 2 only
			C)	Statement 2 and 3 only
			D)	Statement 3 and 4 only
7			The tax imposed on an imported good is known as:
			A)	Quota
			B)	Voluntary export restrictions
			C)	Tariff
			D)	None of the above
8			An increase in the riskiness of domestic assets:
			A)	Increases capital inflows
			B)	Decreases capital inflows
			C)	Does not affect capital inflows
			D)	None of the above
9			Assuming that an economy has savings of $250bn, and investment in new capital goods of $425, then net capital inflows amount to:
			A)	$75bn
			B)	$175bn
			C)	$425bn
			D)	$675bn
10			The graph of the relationship between domestic real interest rates and capital inflows is:
			A)	Horizontal
			B)	Vertical
			C)	Downward sloping
			D)	Upward sloping