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1. Suppose that copper sells for $200 per pound in the United States and for 300...

1.

Suppose that copper sells for $200 per pound in the United States and for 300 euros in Belgium. The dollar trades for 2 euros. If shipping costs are $10, then
a.

you can earn $40 in profit for the first pound of copper shipped from Belgium to the United States.
b.

You can earn $90 in profit for the first pound of copper shipped from the United States to Belgium.
c.

You can earn $90 in profit for the first pound of copper shipped from Belgium.to the United States.
d.

You can earn $40 in profit for the first pound of copper shipped from the United States to Belgium
e.

It is not possible to profit from international arbitrage in this situation.

2.


When unanticipated deflation occurs in the economy, the real burden of nominal debts increases.

True

False

3.

The economy of Testville produce three goods, chests, vests, and Zest (soap) in two different years. The following table shows the prices and quantities for both years. Assume that year 1 is the base year.

item Q1 P1 Q2 P2
chests 2 3 3 2
vests 3 2 2 4
Zest 4 1 5 2

What is the chain-type real GDP for year 2?

a.

19.09
b.

16.97
c.

24
d.

1.06066
e.

25.67

4.

  1. Suppose that GDP = $21 trillion and NFIA = $3 trillion. Then GNP is equal to

    a.

    $24 trillion
    b.

    $63 trilion
    c.

    $21 trillion
    d.

    $7 trillion
    e.

    $18 trillion
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Answer #1

Q1) The answer is (a)

Since copper sells for 300 euros in Belgium - it is equivalent to 150 dollars as value of 1 dollar = 2 euros

If you buy 1 pound of copper from Belgium at $150 and pay the $10 shipping, total cost to you is $160

This 1 pond can be sold in US for $200, thus your profit =200 -160 = $40

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