1 a) Positive statement is a statement that attempts to describe world as it is. It can be tested by referring to available evidence .Normative statement expresses an opinion about what should be.
b) i) positive; ii) positive; iii) normative; iv) normative
2 a) CPI aims to measure price changes. These numbers tell that price level had been increasing at a constant rate during these three years.
b) Inflation rate in 2008= (114.6-111.9)/111.9 x 100=2.4
Inflation rate in 2009= (116.2-114.6)/114.6 x 100=1.4
c) Inflation rate decreased in 2009
d) These CPI numbers could be biased because of the new good bias and quality change bias (with the technological progress more ...view middle of the document...
45 tonne of copper ingots.
b) Chile’s opportunity cost of one tonne of copper ingots is 0.69 tonne of wheat.
c) Chile’s opportunity cost of producing one tonne of copper ingots is lower than Canada’s, so Chile has a comparative advantage in producing copper ingots.
d) If both countries specialize, they’ll be able to produce 200 tonnes of wheat and 175 tonnes of copper ingots.
5 a) Shift of a demand curve to the left. Both equilibrium price and equilibrium quantity will decrease.
b) Supply curve will shift to the right. Increase in equilibrium quantity and decrease in equilibrium price.
c) Demand curve will shift to the right. Both equilibrium price and equilibrium quantity will decrease.
d) Demand curve will shift to the right. Both equilibrium price and equilibrium quantity will increase.
e) Shift in a supply curve to the right. Equilibrium price will increase and equilibrium quantity will decrease.
6 a) 379+ 99+176+(54-40)=668 billions of dollars
b) 48+80+40+365+75+60=668 billions of dollars
c) 48+80+40+365=533 billions of dollars
d) Net investment=176-60=116 billions of dollars
Net exports=54-40=14 billions of dollars
7 Real GDP in year 1=577 x 100/104.5=552
Real GDP in year 2=605 x 100/108.3=558.6
Real GDP 20...