Choose four of the following six questions and answer. 1. How does the value-add

Choose four of the following six questions and answer.
1. How does the value-added concept assist in avoiding double-counting in the measure of Gross National or Domestic Product? Discuss.
2. Describe the principle of comparative advantage in a manner that convinces me that you truly understand it – which is a tall order, I know. Now explain how, at least under the bilateral trading framework envisioned by this theory, it is possible to have a place in the global arena without actually achieving absolute advantage in any line of business. [This question is worth three points extra credit for attempting.]
3. Define total factor productivity and explain how it relates to economic growth.
4. Define and describe the so-called “three prices of money.” How do changes in the money supply affect each.
5. Explain the difference between nominal and real interest rates. Suggest how using a nominal rate to discount investment projects during an inflationary period might distort investment choices. (This requires that you integrate macro and micro ideas.)
6. Describe the three tools of monetary policy and give an example of one in the past 15 years.

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