Explanation​:
While FDI may create job opportunities, these jobs can often be low-skilled positions, as FDI managers often keep the high-skilled positions for recruits from the home country. This prevents training of local workforce and minimizes the chances of improving the host country's human capital.

Choices A, B, and D are advantages of FDI for the host country.

Explanation​:
Devaluing the currency would increase the volume of exports and decrease the volume of imports. Assuming the Marshall-Lerner condition is met, this will increase the value of (X-M), which increases AD, which increases employment.

Choice A is incorrect as stimulating AD will increase the price level.

Choice B is incorrect as there is no direct relationship between currency value and income/wealth inequality.

Choice D is incorrect as devaluing the currency directly increases export volume and reduces import volume.

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​:
The current account of the BOP includes:

• Exports and imports of goods and services
• Net current transfers
• Net incomes

Foreign direct investments are included in the financial account of the BOP

Options A, B, and C are components of the current account:

• Option A is an export of goods
• Option B is an export of services
• Option C is a component of net incomes

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​).

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​:
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​:
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​:
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.

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.

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.

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​:
C will not cause the CAD to appreciate (e11​ to e22​). 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 WTO aims at liberalising trade and discourages trade protection.

The WTO’s stated goals include choices A, B, and C.

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​:  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​:
Domestic producers' equilibrium price is below the world market price, so they are able to export Q1​Q3​ at price P2​.

Choice A is wrong as P2​ is the allocatively efficient world price. Deviating away from it would incur a loss of economic welfare.

Choices B and D are wrong as Q1​Q3​ is exported.

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.

Key idea​:
An external balance refers to a sustained situation where imports of goods and services are roughly equal to exports of goods and services.

Explanation​:
Choice A is correct as contractionary monetary policy in the form of higher interest rates has the following effects:

• disincentivises borrowing by households and firms, lowering consumption spending and domestic investment
• lowering aggregate demand and real GDP
• decreasing imports as AD falls, improving the trade balance
• lowers the average price level, lowers the relative price of exports, increases the relative price of imports, improving the trade balance
• as the trade balance improves, the current account improves and moves toward an external balance

Choices B and D are incorrect because contractionary monetary policy shifts the aggregate demand curve to the left, lowering real GDP in equilibrium.

Choice C is incorrect because although both aggregate demand and real GDP will indeed decrease, it is inaccurate that net exports will also fall, leading to a deterioration of the external balance.

Explanation​:
Statements I and II: the IHDI value equals the HDI value when there is no inequality across people

Statements III and IV: the IHDI $\text{‘}$discounts' each HDI dimension's average value according to inequalities in that dimension, so IHDI falls below the HDI value as inequality rises

Explanation​:
Trade diversion happens when the formation of a trading bloc shifts production from a low-cost producer to a high-cost producer. For example, joining a customs union can require a common external tariff, raising the price of imports from low-cost producers. As a result, trade diverts to higher cost members of the customs union.

Choice B is incorrect because trade creation happens when the entry of a country into a trading bloc shifts production from a high-cost producer to a low-cost producer.

These answer choices do not specifically address the impact of joining trading blocs:

• Choice C refers to comparative advantage which is the reason production costs are high or low. It does not explain why production shifts from one producer to another.
• Choice D refers to increased competition, but production moving from low-cost to high-cost producers results from reduced competition.

Explanation​:
After granting the subsidy, the world price remains the same, but the price domestic producers receive increases. This means that consumers continue to pay $\text{\$}$4 but the government grants an additional $\text{\$}$3 to domestic producers for every unit sold. Therefore option A is false.

Options B, C, and D are true because a subsidy does encourage production and so domestic quantity supplied increases while quantity of imports decreases. Also, domestic quantity demanded remains unchanged because the price consumers pay remains the same.

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​:
(I) Price divergence between exports and imports may cause potential balance of payments problems.
(II) Price volatility for primary commodities contributes to economic instability in terms of greater income risks for individual farmers and governments.
(III) Primary export revenues may cause the domestic currency to appreciate, making other exports less competitive.
(IV) The allocation of windfall incomes can cause conflict and political instability in resource-rich countries by exacerbating issues related to poor governance and dependence on primary commodities.

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