Explanation​:
A government that wanted to develop its export sector would be inclined to have a fixed or managed exchange rate, as they could devalue the currency in order to make the country’s exports more competitive in foreign markets.

Choice A is incorrect, as a low amount of foreign exchange would inhibit a country's ability to manage its exchange rate, meaning the would have to adopt a floating exchange rate.

Choice B is incorrect as a floating exchange rate would grant central banks the freedom to pursue other goals as interest rates impact the exchange rate.

Choice D is incorrect as a floating exchange rate can correct an external imbalance, where the current account either has too high a deficit or surplus.

Explanation​:  D is the incorrect statement. Foreign investors buy more Malaysian investments due to the increased interest rates. Consequently, the supply of foreign currency increases (S1​ to S2​) as they exchange foreign currencies for Malaysian ringgit.

A and B are consistent with a rise in Malaysian interest rates. The cost of loanable funds is interest rates; increased interest rates disincentivise borrowing by Malaysian firms and households, leading to a decline in investment and consumption expenditures.

C is consistent with the view that British investors are attracted to higher interest rates because of higher investment returns.

Explanation​:
Choices A, B, and C are considered when GDP per capita is adjusted for purchasing power parity.

Differences in income distribution across the population are not considered.

Explanation​:
There are 17 SDGs laid down by the United Nations in 2015 which need to be attained within 15 years i.e. by 2030.

Options A, B, and C are incorrect.

Explanation​:
Even though MDCs generally have higher resource consumption which tends to threaten sustainability, they also have better infrastructure and technology, stricter environmental regulations, and greater education and awareness. Therefore LDCs tend to be less sustainable than MDCs.

Choices A and B do not correctly compare LDCs and MDCs. Choice D is incorrect because sustainability is a key factor differentiating economic growth from economic development.

Explanation​:
The current account is the sum of the following values:

• exported goods - imported goods
• exported services - imported services
• net current transfers
• net incomes

Plugging in the given values:

Balance on current account = 450 −120−500 = −$170 million

The following options apply the formula incorrectly and include the capital transfers (a component of the capital account):

• Option B is calculated as 450−500+120+45
• Option C is calculated as 450−120+45
• Option D is calculated as 450−120−500+45

Explanation​:
C will not cause the CAD to appreciate (e1​ to e2​). Selling more CAD in the foreign exchange market (FOREX) shifts the supply curve of domestic currency to the right leading to its depreciation.

A and B have the same effect of decreasing the supply of CAD in FOREX causing the CAD to appreciate (e1​ to e2​).

D shifts the demand for domestic currency rightward, leading to its appreciation (e1​ to e2​).

Explanation​: 

The above green area is the deadweight loss incurred due to the quota. When the quota is removed, overall economic welfare increases by that amount.

Choice B is wrong, as domestic consumers pay PWORLDPWORLD​ after the quota is eliminated.

Choice C is wrong, as the domestic consumer surplus decreases by the blue area.

Choice D is wrong, as the value of net exports should decrease, as the country imports more now (Q1Q5>Q1Q3).

Key ideas​:
A free trade area is an agreement between countries wherein countries agree to trade freely among themselves but set their own barriers for non-member countries.

A customs union is an agreement between countries wherein they agree to trade freely and agree to have common external barriers for non-member countries.

Explanation​:
Statement I is incorrect because there are barriers to labour mobility in free trade areas and customs unions.

Statement II is incorrect because a common external tariff distinguishes a customs union from a free trade area

Statement III is correct because, in both free trade areas and customs unions, members agree to trade freely.

Statement IV is incorrect because neither free trade areas nor customs unions have a common currency.

Key idea​:
The slope of the PPC reflects the opportunity cost of production.

Explanation​:
Country $B$ does not have a comparative advantage in the production of apples because the opportunity cost of producing apples is lower in Country $A$ as it has a flatter PPC. A country with a flatter PPC has a comparative advantage in producing the commodity measured on the horizontal axis.

Option A is correct because the PPC of Country $A$ is above the PPC of Country $B$, which means it can produce more of both goods using the same number of resources.

Option B is correct, as Country $A$'s PPC is flatter than Country $B$'s. So, it has a comparative advantage in the production of apples.

Option C is correct as the PPC of Country $B$ is lower than that of Country $A$, which means it can produce less of both goods using the same number of resources.

Statement II: Import quotas are a form of trade protection as they directly limit the quantity of imports of a particular good into a country.

Statement III: While austerity measures can be used to make a country's output more competitive globally through reducing the overall price level, their explicit goal is not to favour domestic production over foreign production.

Explanation​:
Sustainable development is defined as development that meets the needs of present generations without compromising the needs of future generations.

Options A, B, and D are incorrect:
Option A: as it doesn't mention the needs of future generations
Option B: as it doesn't mention the needs of present generations
Option D: as it does state that the needs of future generations are met but at the cost of the present generations

Explanation​:
Revaluing a currency can improve a nation's standard of living, as a stronger currency can purchase more imports, the consumption of which increase living standards.

Choice A is wrong as devaluation is expansionary, which means it would cause demand-pull inflation.

Choice B is wrong as revaluation is contractionary, which means unemployment would increase as a result.

Choice C is wrong as devaluation would increase net exports, which would increase a current account surplus.

Explanation​:

When there is a closed economy, domestic producers get $\pounds$30 000 in revenue (equal to the red, green and blue area), with a tariff they get £14 000 (the red and green area) and with free trade they make $\pounds$5 000 (just the red area).

Explanation​:
Provision of merit goods like education and healthcare will improve levels of human capital in the long run and allow workers to be more productive and thus earn higher incomes. In the long run, this will also lead to less inequality.

Choices A, C, and D are development strategies but they do not necessarily address levels of human capital or economic inequality.

Export promotion is a strategy used to address low levels of foreign exchange and an overdependence on imports.

Deregulation is a strategy used to encourage foreign direct investment and attract foreign capital.

Economic integration is a strategy used to reduce trade barriers and encourage free trade.

Explanation​:
Statement I: Debt servicing refers to the required regular loan payments needed to cover the interest and principal repayments. Acquiring new debt to service outstanding debt compounds the problem by increasing the total amount of debt owed and the interest payments.

Statement II: Governments cannot sustainably finance their annual expenditures by borrowing money. Funding must ideally come from tax revenues.

Statement III: When a country lacks funding for human and physical capital investments, it may resort to borrowing money to finance long-term investments as they have the potential to increase the country's revenue and income, which could be used to pay off its debts in the future.

Explanation​:
Choice D is correct because the government’s spending on education and health—two factors that affect human capital—has increased.

Choice A is incorrect because higher HDI values reflect an improvement in a nation's economic development.

Choice B is incorrect because a higher HDI ranking suggests a worsening in a nation's economic development compared to other nations.

Choice C is incorrect because a lower Gini coefficient indicates an improvement in income inequality.

Explanation​:
Choice A is the correct answer because appropriate technology is generally described as small-scale solutions that are suitable for local needs, instead of large-scale solutions. Therefore, appropriate technology may not benefit from economies of scale and may be less efficient than other production methods.

Appropriate technology is usually labour-intensive (Choice D), makes use of local skills and materials (Choice C), and is affordable (Choice B).

Explanation​:
If a country has a comparative advantage, it specialises in the production and export of one commodity, and can benefit from economies of scale. Economies of scale lower the cost of production.

Options A and D are incorrect statements:

• Option A is incorrect because technology keeps changing.
• Option D is incorrect as geographical and occupational barriers adversely affect mobility of resources.

Option C is a true statement describing a disadvantage of comparative advantage: specialisation can limit structural changes in a society.

Explanation​:

Domestic producer surplus declines by area $b$ once tariffs are removed.

Choice A is wrong as consumer surplus increases by area b+d+e+f.

Choice B is wrong as imports would increase (from Q2​Q3​ to Q1​Q4​).

Choice C is wrong as overall economic welfare increases by $d+f$, as those areas were deadweight losses when tariffs were in place.

Explanation​:
Choice (I) When the peso depreciates, Filpino exports become relatively cheaper, while imports become relatively more expensive. An increase in net exports shifts the aggregate demand curve to the right causing demand-pull inflation.

Choice (II) An increase in the cost of imported inputs increases production costs, shifting the short-run aggregate supply curve to the left, increasing the average price level and decreasing real GDP in equilibrium.

Choice (III) Depreciation should improve the trade balance, increasing aggregate demand.

Choice (IV) Depreciation raises the cost of imported inputs, decreasing aggregate supply.

Explanation​:
Common markets are trading blocs that feature:

• common external tariffs for non-member countries
• removal of trade barriers among member countries
• free movement of goods, labour, capital, and technology

(Choice B) Customs unions do not allow free movement of labour and capital
(Choice C) Monetary unions also have a common currency
(Choice D) Free trade areas do not include common external tariffs or free movement of goods, labour, capital and technology

Explanation​:
Statement I: this is a possible downside because these policies often show their desired results in the long-run

Statement II: this is another downside because these policies are expensive and entail a huge opportunity cost

Statement III: this is a positive effect of these policies are they will help potential export industries to expand and employ more workers

Statement IV: this is a positive effect of such policies because those potential export industries will compete against industries from foreign countries and this will encourage them to be more efficient

Explanation​:
After implementing the quota, the consumer surplus decreases by $b+d+e+g+h+i$. Area $b$ is taken by domestic producers. Area $d+e+g$ is taken by importing (foreign) producers. This leaves $h+i$ as the deadweight loss.

Explanation​:
When a tariff is imposed:

• The domestic quantity supplied is at the intersection of the SdomesticSdomestic​ and the Sworld+tariffSworld+tariff​ curves (125 000 units).
• The domestic quantity demanded is at the intersection of the DdomesticDdomestic​ and the Sworld+tariffSworld+tariff​ curves (275 000 units).
• The quantity of imports is the difference between domestic quantity demanded and supplied (275 000 $-$ 125 000 = 150 000 units).

Choices A, B, and D are incorrect because they confuse pre-tariff figures with post-tariff figures for at least one of the variables.