Welcome Summer II Students

This is the long awaited first entry for the summer. Unfortunately, the only thing you'll find of interest is the answer key to the study questions. First of all, one obvious error is in the list of "alternatives" for problem 52. The alternative, A, should read as follows:

A. Nominal GDP values production at current prices, while real GDP values production at constant prices.

That's very important to know because that is the correct answer!

So here is the key. I only went over this once so I hope the answers are all right. If you think I got any wrong please send me an email or IM me later (screen name: CinciDood).

1-C, 2-A, 3-C, 4-D, 5-A, 6-C, 7-B, 8-C, 9-B, 10-B,
11-A, 12-B, 13-C, 14-B, 15-B, 16-A, 17-B, 18-A, 19-A, 20-B,
21-A, 22-D, 23-B, 24-B, 25-D, 26-B, 27-B, 28-D, 29-C, 30-C, (initially 25 was A...wrong.)
31-C, 32-B, 33-C, 34-C, 35-A, 36-C, 37-C, 38-C, 39-D, 40-D,
41-D, 42-B, 43-B, 44-A, 45-C, 46-C, 47-D, 48-B, 49-B, 50-A,
51-B, 52-A

I think problem 20 might be a struggle for some people. Here's how you need to approach it. Your point of comparisons are point A and the outcome after trade. Ben has 4 cones and 1 ice cream at his point A. Jerry has 3 cones and 2 ice cream at his point A. Now, when they specialize according to their comparative advantage (as determined in problem 19), they each have only one good and they need to trade. The "terms of trade" are in the problem. So compare the quantities of each good that each person has to their original point A. The "gains" are in terms of how many more units of each good that each person has after the specialization-cum-trade scenario. Got it? (And for all you who just giggled at what I typed, "cum" is Latin for "with". When someone graduates "cum laude" they graduate "with praise". When you graduate "magna cum laude" you graduate "with great praise". When you graduate "summa cum laude" you graduate "with highest praise".)