1- The effect of the harsh budget cuts required by the European countries who made emergency loans to Greece in 2011 was:

a-the speedy return of the Greek economy to full employment.

b-an inflationary gap in the Greek economy.

c-that the Greek economy fell into a liquidity trap.

d-that the Greek economy became even more depressed and was unable to repay its debts in full.

2- When the central bank acts as a lender of last resort, it:

a-raises reserve requirements.

b-reduces reserve requirements.

c-provides a liquidity trap.

d-provides funds to financial institutions when they are unable to borrow from the private credit markets.

3- The sweatshop labor fallacy is the belief that

a-workers in low-wage countries are hurt by imports from high-wage countries.

b-workers in high-wage countries are hurt by imports from low-wage countries.

c-workers in low-wage countries are impoverished by trade.

d-workers in high-wage countries are impoverished by trade.

4.

The figure shows the production possibilities curves for the U.S. and Mexico in the production of refrigerators and tractors. If each country specializes according to its comparative advantage, what will be the outcome?

a-The U.S. will do all the manufacturing for both countries.

b-Mexico will do all the manufacturing for both countries.

c-Mexico will manufacture refrigerators and import tractors.

d-The U.S. will manufacture refrigerators and import tractors.

5- An import quota differs from a tariff in the respect that

a-the quota will not result in higher prices.

b-the quota will not cause any reduction in consumer surplus.

c-the quota will not collect any revenue for the government.

d-the quota will not offer any protection for domestic suppliers.