In 2009, if a country’s real income per capita was about $15,000 and the policy maker
claimed in 6 years, the country’s real income per capita would reached $30,000. Using
the Rule of 70, the country’s growth rate of real GDP per person should maintain at
least _______ percent a year.
12
11
10
6
Follow Q3. Let a = 1/3 , how does income per capita change if saving rates increase by
10%?
Increases 3.3%
Increase 5%
Increase 6.7%
Decrease 3.3%
Follow Q3. Let a = 1/3 , how does income per capita change if population growth rate
increases by 1%?
Decrease 0.67%
Decrease 0.5%
Decrease 0.33%
Increase 0.67%
Follow Q6. A profit maximizing firm sets its real wage to the point where the elasticity
of the efficiency with respect to the real wage is
equal to zero
greater than one
equal to one
between zero and one
In a real business cycle (RBC) model, business cycles are
efficient and do not represent lost output
driven by technology shocks
occur when markets clear
all of the above
It is a constraint appears in a firm’s profit maximization problem.
Australian interest rates were unexpected to rise on Oct. 8, 2009. Which of the
following would occur?
Real wages would rise when income fell.
Real wages would fall when income rose.
Real wages would rise when income rose.
Real wages would fall when income fell.
Follow Q11.
It moved the economy up the short-run Phillips curve.
It moved the economy down the short-run Phillips curve.
It shifted the short-run Phillips curve to the right.
It resulted in a decline in the natural rate of unemployment and a rise in the
inflation rate.
_______ topped that record for hyperinflation in the years of 2008 and 2009.
Dubai
Hungary
Yugoslavia
Zimbabwe
Follow Q13. Which of the following would NOT occur?
Its currency became literally worthless.
Its currency virtually disappeared from circulation.
Its economy fell into a liquidity trap.
Its economy went back to a barter economy.
Follow Q15. Which interest rate will make this person indifferent for holding $1 bond
and $1 money?
If current and future consumption are both normal goods, an increase in the interest rate
will necessarily
cause lenders to lend more.
cause borrowers to borrow less.
reduce everyone’s current consumption.
make everyone worse off.
Assume the consumer pays taxes $5 in period 1 and $8 in period 2. What
happens to the competitive equilibrium value of the net interest rate?
It increases.
It decreases.
It stays the same.
All is possible.
The equilibrium effects of a temporary decrease in total factor productivity include
an increase in the real wage and an increase in the real interest rate.
an increase in the real wage and a decrease in the real interest rate.
a decrease in the real wage and an increase in the real interest rate.
a decrease in the real wage and a decrease in the real interest rate.
The equilibrium effects of a prospective future decrease in total factor productivity
include
an increase in the real wage and an increase in the real interest rate.
an increase in the real wage and a decrease in the real interest rate.
a decrease in the real wage and an increase in the real interest rate.
a decrease in the real wage and a decrease in the real interest rate.
It had an inflation rate of −0.21%.
It had an inflationary gap.
Unemployment rate was below its natural rate.
Cyclical unemployment did not occur.
Follow Q24. Assume that people have adaptive expectations and the adjustment
parameter equals 0.5. What will be the inflation rate in January, 2010 if government
intends to reduce the unemployment rate in January, 2010 to 4%?
0.165%
0.285%
0.33%
0.66%
Japan is more efficient.
Japan’s TFP is 0.56 times the U.S. level.
TFP is referred to as a measure of ignorance.
None of the above.
Which of the following does NOT explain differences in TFP?
Human capital
Natural resources
Institutions
The capital stock
What is the so-called “the balanced growth path?”
The growth rates of all endogenous variables are constant.
The output growth rate is zero.
The growth rates of the exogenous variables are constant.
None of the above are correct.
If interest rates of the U.S. decline, we expect
the EMU IS curve to shift left because the euro would appreciate relative to the
dollar.
the EMU IS curve to shift right because the euro would depreciate relative to the
dollar.
the EMU IS curve not to move because the euro would depreciate relative to the
dollar.
leftward movement along the EMU IS curve because the dollar would appreciate
relative to the euro.
Which of the followings can NOT be sustained?
Floating exchange rates + monetary policy independence + free capital mobility.
Monetary policy dependence + fixed exchange rates + free capital mobility.
Free capital mobility + fixed exchange rates + monetary policy independence.
None of the above.
If Central Bank of Taiwan undervalues the NT dollar and adopts full sterilization, it
leads to
the NT dollar appreciation.
Taiwan’s money supply increasing.
Taiwan’s foreign reserves decreasing.
None of the above.
A change in monetary policy.
Inflation causes the central bank to change interest rates, causing a change in
investment.
A change in the inflation rate causes the government to reduce discretionary
spending.
None of the above.
Which one states that, in the long run, price levels must be the same in all countries?
Purchasing power parity.
The law of one price.
Arbitrage.
None of the above.
Fisher effect means
positive correlation between nominal interest rate and inflation.
positive correlation between nominal interest rate and real interest rate.
negative correlation between nominal interest rate and real interest rate.
None of the above.
Tobin’s q meansq = replacement cost of installed capital / market value of installed capital.
q = replacement cost of installed capital / market value of installed capital.
q < 1 means new investment will be possible.
it implies that investment of the firms is closely related to their stock prices.
None of the above.
People only care about their intertemporal disposal income.
None of the above.
Following Q39, RET may NOT be sustained under
perfect capital market.
budget surplus.
liquidity constraint.
None of the above.
Following Q39, RET may NOT be sustained under
perfect capital market.
budget surplus.
liquidity constraint.
None of the above.
Which is NOT true about Feldstein-Horioka puzzle?
In theory national savings = investment under free capital mobility.
In theory investment is positively correlated to national savings without free capital
mobility.
In practice most industrialized economies violated theoretical prediction in the
1960s.
Investment should be positively correlated to national savings if the current account
is in balance.
Which is the main reason triggering speculative bubbles?
Nominal interest rate.
Self-fulfilling expectation.
Rents.
Tax policy.
Which is true about “classical inconsistency?”
Liquidity trap may solve the problem.
Nominal wage rigidity may solve the problem.
Pigou effect may solve the problem.
B and C.
G, M, I, r, Y, T are government expenditure, money supply, investment, interest rate,
output, and tax, respectively. What is the so-called “transmission mechanism?”
G ↑⇒ r ↑⇒ I ↓
M ↑⇒ r ↓⇒ I ↑
T ↑⇒ r ↓⇒ I ↑
None of the above.
Which of the following is NOT in the capital or financial account?
Direct investment.
Investment income.
Portfolio investment.
Debt forgiveness.
Which is true about the fiscal and current account deficits?
Twin deficits if national savings < investment.
Twin deficits if private savings < investment.
Fiscal deficit if the current account is in deficit.
Current account deficit if national savings < investment.
Which is NOT true about “Lucas critique?”
Only surprise matters.
Reduced form models reflect the past.
Structural estimation is good to policy evaluation.
None of the above.
Which is NOT true about wage and price rigidity?
Fiscal policy is no longer effective after the new wage contracts are signed.
The problem of the menu cost theory is its counter-cyclical characteristics.
Involuntary unemployment is normal if real wage rigidity is true.
None of the above.
Which of the following is NOT true?
Inflation bias is caused by dynamic inconsistency.
Degrees of central bank independence are negatively correlated to inflation rates in
the advanced economies.
The misery index = inflation rates + employment rates.
There is no steady state in the Harrod-Domar model.
Which of the following is NOT true?
The AK model assumes marginal product of capital is constant.
The AK model assumes physical capital and human capital are the same.
Relative convergence hypothesis indicates a country with low per-capita income
now will have high per-capita income growth rates in the future.
The OECD economies can be explained by absolute economic convergence
hypothesis.
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