Which of the following would shift the demand curve for new textbooks to the right?
A fall in the price of paper used in publishing texts.
A fall in the price of equivalent used textbooks.
An increase in the number of students attending college.
A fall in the price of new textbooks.
Which of the following will NOT cause a shift in the supply of gasoline?
An increase in the wage rate of refinery workers.
A decrease in the price of gasoline.
A decrease in the price of gasoline.
A decrease in the price of crude oil
We observe that both the price of and quantity sold of golf balls are rising over time.
This is due to
continual improvements in the technology used to produce golf balls.
increases in the price of golf clubs over time.
decreases in membership fees for country clubs with golf facilities.
more stringent professional requirements on the quality of golf balls requiring
producers to use more expensive raw materials.
Mikey is very picky and insists that his mom make his breakfast with equal parts of
cereal and apple juice-any other combination will end up on the floor. Cereal costs 4
cents per tablespoon and apple juice costs 6 cents per tablespoon. If Mikey’s mom
budgets $8 per month for Mikey’s breakfast, how much cereal and juice does she buy?
40 tablespoons each of cereal and juice.
80 tablespoons each of cereal and juice.
40 tablespoons of cereal and 75 tablespoons of juice.
100 tablespoons of cereal and 67 tablespoons of juice.
Any risk-averse individual would always
take a 10% chance at $100 rather than a sure $10.
take a 50% chance at $4 and a 50% chance at $1 rather than a sure $1.
take a sure $10 rather than a 10% chance at $100.
take a sure $1 rather than a 50% chance at $4 and a 50% chance at losing $1.
decreasing returns to scale for all output levels.
constant returns to scale for all output levels.
increasing returns to scale for all output levels.
no clear pattern of returns to scale.
If a competitive firm’s marginal costs always increases with output, then at the profit
maximizing output level, producer surplus is
zero because marginal costs equal marginal revenue.
zero because price equals marginal costs.
positive because price exceeds average variable costs.
positive because price exceeds average total costs.
At the current level of output, long-run marginal cost is $50 and long-run average cost
is $75. This implies that
there are neither economies nor diseconomies of scale.
there are economies of scale.
there are diseconomies of scale.
the cost-output elasticity is greater than one.
How are a firm’s short-run and long-run average cost curves related?
SRAC is greater than LRAC, which forces the LRAC curve to be upward sloping.
SRAC and LRAC slope up or down together, but SRAC is always the steeper of the
two curves.
The SRAC curve is tangent to and lies above the LRAC curve.
The LRAC curve just touches the SRAC curve at its minimum point.
A firm is currently producing 200 units of output using 60 hours of labor and 80 hours
of capital. The marginal product of labor is 12 units of output per hour, and the
marginal product of capital is 15 units of output per hour. If the wage rate is $6 per
hour and the rental rate is $3 per hour, then
the firm’s use of labor and capital is cost-efficient.
the firm should use more labor and less capital.
the firm should use more capital and less labor.
we cannot determine if the firm’s use of inputs is efficient without more
information.
There are three firms in Green Valley. Initially, each firm emits 4 units of pollution.
The following table shows the total costs for each of three firms (A, B, and C) to
eliminate units of pollution from their production processes. For example, for Firm A
to eliminate one unit of pollution, it would cost $1, and for Firm A to eliminate two
units of pollution, it would cost a total of $3.
Suppose the government wants to reduce pollution to 9 units, so it gives each firm 3
tradable pollution permits. Which of the following statement is true?
Firm A will buy permit(s) from firms B and C.
Firms A and B will buy permit(s) from firm C.
Firm B will buy permit(s) from firms A and C.
Firms B and C will buy permit(s) from firm A.
A monopolistically competitive firm is currently producing 10 units of output. At this
level of output the firm is charging a price equal to $10, has marginal revenue equal to
$6, has marginal cost equal to $6, and has average total cost equal to $12. From this
information we can infer that
the firm can increase its profit by producing less.
the profits of the firm are negative.
firms are likely to enter this market in the long run.
the firm’s fixed cost must be greater than 20.
It is commonly argued that national defense is a public good. Nevertheless, many
weapons used by the R.O.C. military are produced by U.S. private firms. We can
conclude that
resources would be used more efficiently if the U.S. firms produced the weapons.
resources would be used more efficiently if private firms provided national defense.
weapons are rival in consumption and excludable.
national defense is rival in consumption and excludable.
Some economists argue that a resale price maintenance agreement is not
anti-competitive because
suppliers are never able to exercise noncompetitive market power.
if a supplier has market power, it can exert that power through the wholesale price
rather than the retail price.
retail markets are inherently noncompetitive.
resale price maintenance prevents the retailers from competing on price.
A monetary expansion combined with an increase in government spending will cause
an increase in output with ambiguous effects on the interest rate.
a reduction in output with ambiguous effects on the interest rate.
an increase in the interest rate with ambiguous effects on output.
an reduction in the interest rate with ambiguous effects on output.
Which of the following event is most likely to occur when the interest rate increases?
the money demand curve shifts to the right.
the money demand curve shifts to the left.
the price of bonds will fall.
the price of bonds will rise.
The recent recession may increase the marginal propensity to save, which tends to
cause
an increase in the multiplier and a given change in government expenditures to
have a smaller effect on equilibrium output.
a reduction in the multiplier and a given change in government expenditures to
have a smaller effect on equilibrium output.
an increase in the multiplier and a given change in government expenditures to
have a greater effect on equilibrium output.
a reduction in the multiplier and a given change in government expenditures to
have a greater effect on equilibrium output.
According to the theory of liquidity preference, which variable adjusts to balance the
supply and demand for money?
interest rate
monetary base
quantity of output
price level
Which of the following events will trigger a rightward shift of the aggregate demand
curve?
an increase in the price level.
an increase in tax.
an increase in money supply.
an increase in the nominal wage.
Without an accommodating monetary policy, a push by workers to get higher wages
will cause
hyperinflation.
higher unemployment.
cost-push inflation.
demand-pull inflation.
If the government issues debt to the public to finance its spending, the monetary base
will__________ and the money supply will____________ .
decrease; increase
increase; increase
increase; decrease
not change; not change
If the expected path of one-year interest rates over the next five years is 5 percent, 6
percent, 8 percent, 9 percent, and 7 percent, then according to the expectations theory
today’s interest rate on the five-year bond should be
4 percent.
5 percent.
6 percent.
7 percent.
If a bank has $80,000 of checkable deposits, a required reserve ratio of 20 percent on
these deposits, and it holds $40,000 in reserves, then the maximum deposit outflow it
can sustain without altering its balance sheet is
$20,000
$30,000
$40,000
$25,000
The most important advantage of discount policy is that the central bank can use it to
control the money supply.
punish banks that have deficient reserves.
perform its role as lender of last resort.
precisely control the monetary base.
The nominal exchange rate is the
nominal interest rate in one country divided by the nominal interest rate in the other
country.
price of a good in one country divided by the price of the same good in another.
rate at which a person can trade the currency of one country for the currency of
another.
the number of goods a person can trade for a similar good in another country.
If the direct nominal exchange rate, S, is domestic dollar per foreign currency, the
domestic price is P, and the foreign price is p*, the direct real exchange rate is defined
as
(SP*)/P.
(SP)/P*.
P*/(SP).
P/(SP*).
If purchasing-power parity holds, then the value of the
real exchange rate is equal to one.
nominal exchange rate is equal to one.
real exchange rate is equal to the nominal exchange rate.
real exchange rate is equal to the difference in inflation rates between the two
countries.
Which of the following statements is incorrect for an open economy?
A country can have a trade deficit, trade surplus, or balanced trade.
A country that has a trade deficit has positive net capital outflow.
Net exports must equal net capital outflow.
National saving must equal domestic investment plus net capital outflow.
The People’s Republic of China has had a large trade surplus in recent years. Which of
the following is the most likely explanation of this surplus?
China has a high rate of inflation, which reduces the value of its currency.
China has a large supply of labor, so low wages give it a competitive edge.
China has many trade barriers, which restrict the ability of other countries to sell
their products in China.
China has a large amount of saving relative to domestic investment.
Suppose the market for wine can be described by the following equations:
Demand: P = 60 −Q , Supply: P = 2Q− 30 ,
where P is the price in dollars per bottle and Q is the quantity in millions of bottles.
(一) What is the equilibrium price and quantity? Now suppose the government imposes
a tax of $3 per bottle to reduce wine consumption and raise government revenues.
What will the new equilibrium quantity of wine be? (4%)
(二) Calculate the effects of the tax on consumer surplus, producer surplus and social
welfare. (4%)
Customers attending baseball games at the local arena must pay for parking on the
grounds and then pay for a ticket needed to enter the arena. If the arena manager knows
that the customers’ identical demands can be expressed collectively as
P=25−0.000625Q. How much of a parking fee could the management collect if the
marginal cost of providing entertainment were a constant MC=$10 per seat? (8%)
During the recent financial turmoil, the U.S. M1 money multiplier kept slipping and it
even dropped below 1 in the early 2009.
(一) What are the likely causes of this historically low level of the money multiplier?
(2%)
(二) How would such a low money multiplier affect the effectiveness of the monetary
policy applied by the Federal Reserve Bank? (3%)
(三) Suppose you work for Paul Volcker, the Chair of the U.S. President’s Economic
Recovery Advisory Board, in the capacity of an economic advisor. Please use the
AD-AS model and other models, if necessary, to explain how you would suggest
the government to fight the recession. (3%)
Recently as a result of the Federal Reserve’s actions to save the financial institutions
and markets, the monetary base of United States has been exploding. However, the
increase in the broader monetary aggregate such as M2 is much more moderate.
(一) Please suggest reasons explaining the M2’s moderate growth despite the dramatic
increase in monetary base. (2%)
(二) Suppose you are a bank with $100,000 in vault cash. When the central bank
conducts open market operation to sell government bonds, you decide to use the
$100,000 to purchase these bonds to earn interest. How would your action affect
the monetary base? (2%)
(三) Or, you simply decide to put the $100,000 in the reserve account of your bank at
the central bank. How would this action affect the monetary base? (2%)
(四) Please comment on the following statement: “When reserves pay interest (as the
Fed now does), the monetary base becomes an uninteresting economic statistic.”
(2%)
(一) “Faster population growth might increase a country’s GDP, but it makes everyone
poorer.” Is the above statement true, false, or uncertain, and why? (4%)
(二) Can capital accumulation itself sustain growth in GDP per capita in the long term?
Why or why not? (5%)
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