Explanation:
III would close the gap in SDG 1 (End poverty in all its forms everywhere)
IV would close the gap in SDG 2 (End hunger, achieve food security and improved nutrition and promote sustainable agriculture)
V would close the gap in SDG 4 (Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all)
VI would close the gap in SDG 6 (Ensure availability and sustainable management of water and sanitation for all)

I would worsen income inequality as increasing VAT is regressive
II may improve business confidence and investment but is not a guarantee of an improved standard of living because of the possibility of “jobless growth”.

Choices A, C, and D are possible drawbacks of such policies: they are expensive and may place an unsustainable burden on national debt, they involve long time-lags, and the increased government spending may create inflationary pressures in the economy.

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: 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.

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:
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 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 $\pounds$14 000 (the red and green area) and with free trade they make $\pounds$5 000 (just the red area).

Choice A is incorrect as a rise in FDI into the US would increase demand for dollars.

Choice C is wrong because a consistently low inflation rate would make US exports more competitive over time, increasing demand for the dollar.

Choice D is wrong as higher interest rates would attract demand for the US dollar.

To devalue its currency, the country must:

• Sell the domestic currency, which increases its supply on foreign exchange markets. This eliminates choices A and B.
• Buy pounds. This causes demand for the pound to increase, causing it to appreciate against the local currency. This eliminates choice C.

Explanation:
The Human Development Index (HDI) is a measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable, and having a decent standard of living.

Choice B is correct because Kiribati's higher mean years of schooling, possibly from greater education expenditures, result in a higher HDI than Honduras.

Choices A & C are incorrect because they suggest factors that would lead to a lower HDI for Kiribati compared to Honduras.

Choice D is incorrect because Honduras' life expectancy is higher than Kiribati's even though Kiribati spends a higher percentage of GDP on healthcare. Therefore, spending on healthcare does not contribute to Kiribati's higher HDI.

Explanation:
Statement I: Import tariffs are a form of trade protection, as they are taxes that increase the price of imports, which cause domestic consumers to switch toward consuming domestically produced goods.

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:
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:
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.

Explanation:
Statement I: an argument for trade protection is infant industries may be unable to compete against cheap imports from abroad, so tariffs keep infant industries competitive until they are fully established.

Statement II: national security concerns are a commonly-cited argument for trade protection, especially in the case of drugs, weapons, and essential goods.

Statement III: tariffs can be used to counter dumping by other countries, which happens when they sell their product at prices below cost as a way of getting rid of their surplus. This is unfair to domestic industries who may not be able to compete.

Statement IV: Less choice for consumers is an argument against trade protection, as it creates less variety in the imports of goods that are made available to domestic consumers.

Explanation:
Domestic producers' equilibrium price is below the world market price, so they are able to export Q1Q3 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 Q1Q3 is exported.

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:

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 Q2Q3 to Q1Q4).

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

Explanation:
Statement I: Trading partners often retaliate with their own forms of trade protection and this may set off a trade war.

Statement II: Tariffs and other forms of trade protection often lead to higher prices and create a welfare loss, thus resulting in an inefficient global allocation of resources.

Statement III: Protecting domestic jobs is a commonly cited argument for trade protection, because competition against lower-priced imports can lead to job losses in domestic industries.

Statement IV: If trading partners retaliate with their own trade protection measures then the country’s exports will be more expensive and less competitive, not more competitive.

Explanation:
2023 cost: 60.22×200 000=12 044 000

2020 cost: 56.19×200 000=11 238 000

Increase in cost: 12 044 000−11 238 000=806 000 pesos

A is the cost in pesos in 2023.

C is incorrect because the consultant's pay (200 000 euros) is a constant. The answer incorrectly applies the percentage the euro appreciated (7.17$\%$) to the original 200 000 euros.

D is the cost in pesos in 2020.

Explanation:
Before the imposition of the tariff, 10 000 units were imported at the price of $\pounds 1$. After the imposition, 5 000 units are exported at the price of $\pounds 2$, with half of the revenue going to those foreign producers, and half to the government levying the tax.

£5000−£10000=−£5000

Explanation:
C is correct because an overvalued currency's exchange rate is kept artificially high, above the equilibrium in a floating exchange rate regime.

A and B are incorrect because they imply appreciation or depreciation, not overvaluation.

D is wrong because it defines an undervalued currency.

Explanation:
Statement I: tariffs in this scenario will be an anti-dumping measure to counter Protopia’s dumping of its products at below-cost prices.

Statement II: Econland’s tariffs are a response to Protopia’s unfair competition, and many economists would argue that tariffs in this case are justifiable.

Statement III: Econland’s tariffs are used to counter Protopia’s dumping and will thus protect domestic jobs in those industries harmed by Protopia’s actions.

Statement IV: Trade protection leads to a misallocation of resources, even when in response to dumping by a trade partner. Countries can utilize diplomacy and political pressure to prevent dumping, rather than resort to tariffs.

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:
The HDI is a composite indicator measuring economic development across three dimensions:

• Standard of living, measured by GNI per capita (PPP) (Choice B)
• Education, measured by mean years of schooling (Choice C) and expected years of schooling
• Health, measured by life expectancy at birth (Choice D)

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.