Chapter 2

2. Assume a German tourist buys a Mexican beer in a pub in Houston, Texas. How will the U.S. GDP be affected? C

A.U.S. GDP will be unaffected, since a foreigner buys a foreign product.

B. U.S. GDP will decrease since the beer has to be imported from Mexico

C. U.S. GDP will increase by the value added at the Houston pub

D. U.S. GDP will increase, but only by the sales tax assessed on the beer

7. If nominal GDP is $10,406 billion and the GDP-deflator is 110, then real GDP is about $9,460 billion

8. The GDP-deflator and the CPI differ from each other since C

A. the GDP-deflator does not include services but the CPI does

B. the GDP-deflator includes imported goods but the CPI doesn't

C. the CPI measures a fixed market basket but the GDP-deflator doesn't

D. the CPI includes more goods than the GDP-deflator does 9. Assume you desire a real rate of return of 4% on an investment and you expect the annual average inflation rate to be 3.2%. What should the nominal interest rate be on this investment? 7.2%

Chapter 9

3. Assume a model with no government and no foreign

sector. If the consumption function is defined as C = 800 + (0.8)Y, and the income level is Y = 2,000, then the level of total saving is -400

4. Assume a model with no government and no foreign sector. If we have a savings function that is defined as S = - 200 + (0.1)Y and autonomous investment decreases by 50, by how much will consumption change? -450

5. Assume a model without income taxation and no foreign sector. If government purchases are increased by $25 billion financed by a lump sum tax increase of $25 billion, then A

A. national income will increase by $25 billion but the budget deficit is unaffected

B. national income will increase $50 billion but the budget deficit is unaffected

C. neither national income nor the budget deficit will be affected

D. we cannot say for sure what will happen to national income or the budget deficit

6. The size of the expenditure multiplier increases with an increase in C

A. government transfer payments B. the marginal propensity to save C. marginal propensity to consume D. the income tax rate

7. Assume the savings function is S = - 200 + (1/4)YD and the marginal tax rate is t = 20%. If the level of government spending increases by 100, by how much will the level of equilibrium income change? 250

8. Assume a model of the expenditure sector with income taxes. If the level of autonomous investment decreases (due to

negative business expectations), which of the following will be true? D

A. the actual budget surplus will not be affected B. the actual budget surplus will increase C. the structural budget surplus will decrease

D. the cyclical component of the budget surplus will decrease 9. Assume the consumption function is C = 600 + (3/4)YD and the income tax rate is t = 20%. What will be the effect on the actual budget surplus of an increase in autonomous investment by 200? an increase by 100

10. Assume the consumption function is C = 200 + (0.8)YD and the income tax rate is t = 0.25. What will be the eff ect of an increase in government transfers by ΔTR = 100 on the full-employment budget surplus? an decrease by 100

Chapter 10

4.哪些會使IS曲線變陡峭并向左移動？D A.貨幣供應(yīng)量的減少 B.轉(zhuǎn)移支付的減少 C.一筆稅收的減少 D.所得稅率的減少 5.LM曲線左上方表示D A.商品和服務(wù)的過度需求 B.商品和服務(wù)的過度供給 C.貨幣的過度需求 D.貨幣的過度供給

6.LM曲線會在什么情況下變平坦？B A.貨幣需求對利率變化的敏感度低 B.貨幣需求對收入變化敏感度低 C.貨幣需求對收入變化敏感度高 D.貨幣乘數(shù)變大

7.在IS-LM模型中，如果自主儲蓄增加會導(dǎo)致 收入和利率均減少

8. 在IS-LM框架下，擴(kuò)張性貨幣會 增加消費(fèi)和投資

9.沿著AD曲線從左向右運(yùn)動相當(dāng)于B A.由于利率下降，IS右移

B.由于實(shí)際貨幣余額增加，LM右移 C.由于增加名義貨幣供給量，LM右移

D.由于較低的實(shí)際貨幣余額，沿著LM曲線從左向右移動 10.什么情況下AD曲線右移 A A.轉(zhuǎn)移支付增加

B.由于價(jià)格水平下降，實(shí)際貨幣余額增加 C.自主儲蓄增加

D.央行名義貨幣供給量Chapter 11

1. 在美國，擴(kuò)張性貨幣常以下方式進(jìn)行：C A．財(cái)政部發(fā)行新債券來融資增加預(yù)算赤字

B. 美聯(lián)儲要求銀行增加貸款活動

C. 美聯(lián)儲從銀行或安全經(jīng)銷商那購買債券，以換取金錢 D.美聯(lián)儲鄉(xiāng)出售債券 4.擴(kuò)張性財(cái)政的副作用

利率上升會導(dǎo)致國內(nèi)生產(chǎn)總值的組成發(fā)生變化 5.如果央行固定匯率B

A.每次財(cái)政擴(kuò)張后要承擔(dān)公開市場銷售 B.每次IS曲線變動時(shí)，央行都要調(diào)整貨幣供給 C.財(cái)政變化不會影響消費(fèi)和投資 D.上述所有 6.擠出指的是C

A.當(dāng)所得稅提高時(shí)，消費(fèi)水平降低 B.投資補(bǔ)貼減少后，投資水平降低

C.財(cái)政的變化通過改變利率影響GDP的構(gòu)成

D.流動性陷阱時(shí)，財(cái)政完全無效 8. 如果通過投資補(bǔ)貼刺激經(jīng)濟(jì)，B A. 投資和產(chǎn)出水平會增加，但消費(fèi)將不受影響 B. 投資增長的一部分會通過提高利率來抵消 C. 可避免增加利率

D. 央行的幫助下仍然必要的，因?yàn)檠a(bǔ)貼不會使利率上升 10. 如果央行拒絕大量增加支出，最可能的結(jié)果將是 A.由于利率改變，國際收支的經(jīng)常賬戶出現(xiàn)盈余 B.由于利率改變，消費(fèi)水平下降 C.GDP組成發(fā)生變化 D.上述所有 Chapter 12

2. Which of the following items is a surplus item in the balance of payments for the United Sates?

A. a U.S. car dealer buys 20 BMWs from Germany and sells them at a profit in the U.S.

B. a U.S. citizen deposits funds in a bank in the Bahamas C. a German firm pays to get a license for the use of American technology

D. Bill Gates buys himself a small island off the coast of Indonesia

4. 如果美國商品的價(jià)格水平為P = 110，外國商品的價(jià)格水平為P f = 220，名義匯率為e=1.2，真正匯率為 2.4

6. The concept of relative purchasing power parity implies that

A. the real exchange rate adjusts slowly to its long-run average level

B. the domestic price level will change rapidly until the real exchange rate is equal to 1

C. the relative demand for domestic goods will rise if the real

exchange rate is below 1

D. the long-run relative price level of domestic to foreign goods (P/P f) is equal to 1

7. Restrictive monetary policy in the U.S.

A. lowers the value of the U.S. dollar relative to other currencies

B. increases the value of the U.S. dollar relative to other currencies

C. increases U.S. net exports

D. should not have any effect on the U.S. trade balance 9. In a model with flexible exchange rates and perfect capital mobility, restrictive fiscal policy is likely to cause

A. an appreciation of the domestic currency B. a decrease in the current account surplus C. an increase in net exports D. an inflow of funds

10. A country that follows a beggar-thy-neighbor policy A. induces an exchange rate depreciation to increase domestic output via monetary policy

B. uses fiscal policy to increase its competitiveness on world markets

C. imposes a tariff on imported goods

D. tries to benefit from an increase in world demand by selling domestic products at higher prices

Chapter 5

2.The Keynesian AS-curve implies that

A) the economy is always at the full-employment level of output

B) the AS-curve is completely vertical C) wages and prices are completely flexible

D) a change in spending will affect the level of GDP but not the price level

3 In the Keynesian AS-curve case, if the government cuts welfare payments, then

A) the price level will decrease, but the economy will remain at the full-employment level of output

B) the level of output will decrease but the price level will remain the same

C) the levels of output and prices will decrease

D) unemployment will increase, since wages and prices are completely flexible

4.The slope of the AS-curve becomes steeper A) as wages and prices become more flexible B) as wages become more rigid

C) as the economy moves further away from full employment D) as the government implements expansionary fiscal policy 5.If the unemployment rate is assumed to be at its natural rate, then

A) inflation cannot exist

B) the unemployment rate is zero

C) the unemployment rate is positive but at a level that exists when GDP is at its potential level

D) all unemployment is cyclical in nature 6.In the medium run, an increase in oil prices will A) increase the price level but reduce the level of output B) lead to a decrease in aggregate demand C) lead to an increase in aggregate demand D) not affect the level of real output 10.As potential GDP grows over time

A) the level of output is essentially determined by shifts in

the vertical AS-curve

B) the price level remains constant

C) the AD-curve shifts to the right due to a change in the average price level

D) the level of actual output can only change if the AD-curve shifts accordingly

Chapter 6

5.The coordination approach to the Phillips curve focuses on the fact that

A) fiscal and monetary policies often are uncoordinated B) firms are reluctant to change wages and prices because they aren't sure what their competitors will do

C) workers are well informed about changes in their nominal wages but not about changes in their real wages

D) anticipated changes in monetary policy have no significant effect on the unemployment rate

7.Which of the following equations best describes Okun's law? A) (Y - Y*) = 0.5(u - u*) B) (Y - Y*)/ Y* = - 2(u - u*) C) (Y* - Y) = 2(u - u*) D) (Y* - Y)/Y = - 0.5(u - u*)

9.Which of the following is the most likely result of an unanticipated increase in money supply?

A) higher prices and output in the medium run but no change in output in the long run

B) higher prices and lower real money balances in both the medium and the long run

C) higher prices and employment in the medium run, but no change in output and prices in the long run

D) higher prices and output in the medium and long runs

10.If the government employs restrictive monetary policy in response to an adverse supply shock,

A) the inflation rate and the natural rate of unemployment will both decrease

B) the rate of unemployment will increase sharply C) unemployment will remain at its natural level

D) the shift in the AS-curve can be reversed almost immediately

Chapter 3

3.If we assume a Cobb-Douglas production function where the share of labor is 3/4 and the share of capital is 1/4, then the marginal product of capital can be calculated as

A) 3Y/4K B) Y/4K C) 4Y/K D) Y/K

5.Assume a Cobb-Douglas aggregate production function in which labor's share of income is 0.7 and capital's share of income is 0.3. At what rate will real output grow if labor grows at

2.0%, the capital stock grows at 1.0%, and total factor productivity increases by 1.8%?

A) 4.8% B) 3.5% C) 3.0% D) 1.8%

6.In the neoclassical growth model, a decrease in the savings rate

A) raises the growth rate of output per capita B) lowers the growth rate of output per capita C) raises the steady-state capital-labor ratio

D) lowers the steady-state capital-labor ratio

7.In the neoclassical growth model, a decrease in the rate of population growth will

A) decrease the growth rate of output B) decrease the level of output per capita C) decrease the steady-state capital-labor ratio D) all of the above

8.In the neoclassical growth model, a one-time increase in technology will

A) increase the growth rate of output B) shift the investment requirement line up C) increase the steady-state capital-labor ratio D) all of the above Chapter 4

1.Constant returns to scale for capital alone implies that A) as both capital inputs and labor inputs are doubled, output will more than double

B) as both capital inputs and labor inputs are doubled, output will less than double

C) as both capital inputs and labor inputs are doubled, output will double

D) as capital inputs are doubled, output will less than double 2.Paul Romer's notion of social returns to capital implies that A) the contribution of any new knowledge will not just go to the producer of new knowledge but be shared by others as well

B) new capital investments have a bigger impact on growth if the owners of capital share their newfound wealth with the poor

C) investment in real capital benefits society as a whole while investment in human capital only benefits those who invest in

themselves

D) investment in real capital has a bigger impact on labor productivity than investment in human capital

3.The distinction between private and social returns to capital is important since

A) policy makers want to know how much the government can gain from capital investments

B) capital investments cannot be undertaken profitably unless subsidized by the government

C) capital investments often have important spillover effects D) capital investment increases labor productivity

4.Assume an endogenous growth model with labor augmenting technology and a production function of the form Y = F(K,AN), with A = 2(K/N) such that y = 2k. If the rate of population growth is n = 0.03, the rate of depreciation is d = 0.04, and the savings rate is s = 0.08, the growth rate of output per capita is

A) 15% B) 9% C) 7% D) 1%

5.Assume an endogenous growth model with labor augmenting technology and a production function of the form Y = F(K,AN), with A = 1.2(K/N) such that y = 1.2k. If the rate of population growth is n = 0.03, the rate of depreciation is d = 0.05, how large would the savings rate (s) have to be to achieve a per-capita growth rate of output of 4 percent?

A) 12% B) 10% C) 8%

D) 4%

6.Assume an aggregate production function with a constant marginal product of capital and with capital as the only factor of production, such that Y = aK. If there is neither population growth nor depreciation of capital, the growth rate of per-capita output is

A) Δy/y = sa

B) Δy/y = sa + (n - d) C) Δy/y = sa + (n + d) D) Δy/y = sa/(n + d)

7.The idea that increased investment in research and development will enhance economic growth is

A) the key to linking higher savings rates to higher equilibrium growth rates

B) totally unproven

C) a crucial element of conditional convergence D) an important part of the neoclassical growth model 8.Conditional convergence is predicted for two countries with the same population growth and access to the same technology. This means that they will eventually

A) reach the same income per capita and the same economic growth rate even if they have different savings rates

B) reach a different income per capita but the same economic growth rate even if they have different savings rates

C) reach the same income per capita and different economic growth rates if they have different savings rates

D) reach different income per capita levels and different economic growth rates if they have different savings rates

9.Endogenous growth theory predicts that countries will achieve higher economic growth rates if they manage to

A) lower their population growth B) increase their savings rates

C) shield their industries from foreign competition D) all of the above

10.The four \"Asian Tigers\" achieved their economic growth between 1966 and 1990 mostly through

A) population control

B) protection of domestic industries from foreign competition

C) hard work and sacrifice

D) a large degree of government intervention Chapter 13

1.Keynes' theory of consumption behavior largely relied on the equation C = Co + cY. This equation implies that the value of the average propensity to consume

A) increases as the economy goes into a recession B) increases as the economy goes into a boom

C) remains constant whether the economy goes into a boom or a recession

D) is always lower than the value of the marginal propensity to consume

2.Assume a worker at age 30 with no wealth and an expected average annual earnings of $50,000, who wants to retire at age 65 and expects to live until age 80. According to the life-cycle hypothesis what dollar amount does that person consume annually?

A) $45,000 B) $40,000 C) $35,000 D) $30,000

3.If we divide consumption expenditures into the purchases of non-durable goods and the purchases of durable goods, we realize that

A) the life-cycle and permanent-income theories apply much more to the consumption of non-durable goods than durable goods

B) the consumption of non-durable goods is much more interest sensitive than the consumption of durable goods

C) the consumption of non-durable goods is more strongly affected by a surprise change in income than the consumption of durable goods

D) the consumption of durable goods this year is largely the same as the consumption of durable goods last year

4.According consumption

A) the short-run multiplier is identical to the long-run multiplier

B) the short-run multiplier is larger than the long-run multiplier

C) the short-run mpc is larger than the long-run mpc D) the short-run mpc is smaller than the long-run mpc 5.According to the permanent-income hypothesis

A) increases in current income lead to large increases in current consumption

B) current consumption is not significantly affected by a temporary change in income

C) the mpc out of transitory income is greater than the mpc out of permanent income

D) increases in the interest rate will affect consumption negatively

to

the

permanent-income

theory

of

6.The random-walk theory of consumption

A) clearly contradicts the permanent-income theory B) predicts that current consumption is most strongly affected by current income

C) predicts that this year's consumption is most strongly affected by last year's consumption

D) does not support the notion that people have rational expectations

7.The fact that consumption exhibits \"excess smoothness\" implies that

A) consumption responds too strongly to surprise changes in income

B) current consumption can be predicted based on changes in current income

C) changes in transitory income have no effect on current consumption or saving

D) none of the above

8.If we account for liquidity constraints,

A) we can explain why a temporary tax increase may have an effect on current consumption

B) we have to discard the permanent-income hypothesis C) consumption becomes much more interest sensitive D) consumption responds much less severely to surprise changes in income

9.Household savings behavior tends to be fairly interest inelastic, which can be largely explained by

A) a very large substitution effect

B) the fact that the income effect dominates the substitution effect

C) the fact that the substitution effect is largely offset by the

income effect

D) the fact that the consumption of durable goods tends to be very interest inelastic

10.Which of the following is an objection to the Barro-Ricardo proposition?

A) people believe that debt-financing merely postpones taxation

B) people who benefit from a tax cut now are often not the same people who pay higher taxes later

C) a tax cut may ease a person's liquidity constraints, inducing the person to consume more

D) most people can borrow funds when necessary and therefore always consume according to their permanent income

Chapter 14

1Which of the following will NOT affect the productive capacity of a country?

A) more people getting a higher education B) more people investing in government bonds

C) the government improving the infrastructure such as bridges and highways

D) firms replacing old PCs with newer, more efficient ones 2In absence of taxation, the rental cost of capital can be defined as

A) rc = i + πe - d B) rc = i - πe - d C) rc = i - πe + d D) rc = i + πe + d

3If we ignore taxation and know that the rental cost of capital is 12%, the expected rate of inflation is 4%, and the nominal interest rate is 9%, we can conclude that the rate of depreciation

must be

A) d = 1% B) d = 7% C) d = 17% D) d = 25%

4If the rental cost of capital is above the marginal product of capital, then a firm should

A) increase its investment spending B) decrease its investment spending

C) not replace some of the machines that have broken down in the production process

D) undertake primarily replacement investments

5Assume a Cobb-Douglas production function of the form Y = AK0.2N0.8. If the rental cost of capital is rc = 5%, the desired capital stock of a cost-minimizing firm should be equal to

A) K* = 2Y B) K* = 4Y C) K* = 5Y D) K* = 8Y

6Assume the market interest rate is 10% and is not expected to change over the next three years. If an investment project has net returns of $2,420 after one year, $3,630 after the second year, and $3,993 after the third year, what is its net present discounted value?

A) $10,043 B) $9,130 C) $9,020 D) $8,200

7The most likely source of funding for a U.S. firm wishing to finance a new investment project is

A) a credit line with a bank B) retained earnings C) selling bonds

D) issuing equity (stocks)

8According to the accelerator model,

A) a change in investment is proportional to the level of output

B) the level of investment spending is proportional to the level of output

C) the level of investment spending is proportional to the change in output

D) the level of investment spending is mainly affected by interest rate changes

9Expansionary monetary policy has an effect on the housing market since it

A) decreases the price of all assets, including housing prices B) lowers real interest rates in the long run, so people will postpone buying homes

C) lowers nominal interest rates, so banks find mortgage lending less profitable

D) lowers nominal interest rates, so more homebuyers are able to qualify for mortgages

10An unanticipated decrease in the level of inventories may occur

A) in the midst of a boom, as firms prepare for the upcoming recession

B) in a boom when increased sales cannot be met by increases in production

C) in a recession when firms expect lower profits and try to keep their costs low

D) at the beginning of a recession as firms slash their prices to induce more sales

Chapter 15

1.As credit and debit cards are more widely used, we should expect that

A) more money balances will be held in M1 B) more money balances will be held in M2 C) less money balances will be held in M2

D) less money balances will be held in M1, but those held in M2 will remain unchanged 2Which of the following would lead to increased money balances in M1?

A) more purchases made on the internet B) more credit card purchases C) lower inflationary expectations D) all of the above

3A financial asset is considered less liquid if A) it has a longer maturity

B) it is issued by the government rather than a large corporation such as Microsoft

C) it earns a lower yield D) none of the above

4The Baumol-Tobin square-root formula for money demand applies primarily to

A) the transactions motive of holding money B) the precautionary motive of holding money C) the speculative motive of holding money D) the store-of-value motive of holding money

5According to the Baumol-Tobin square-root formula, the amount of money balances held for transaction will

A) increase as interest rates increase

B) decrease as the cost of money transactions increases C) increase less than proportionately to increases in income D) all of the above

6The speculative demand for money

A) will always increase proportionately to the precautionary demand for money

B) will always increase proportionately to the transactions demand for money

C) is affected by changes in bond yields but not equity yields D) cannot be easily separated from money demand for transaction or precaution

7If the expected growth rate in real GDP for next year is 2.5%, we can anticipate that the demand for M1 money holdings will

A) also increase by 2.5% B) increase by more than 2.5% C) increase by less than 2.5% D) remain constant

8The income velocity of money is defined as A) real money supply divided by real GDP

B) nominal money supply divided by nominal GDP C) nominal GDP divided by nominal money supply D) national income divided by the currency outstanding 9If the government increases the level of government purchases, we can expect that

A) interest rates and the income velocity of money will both increase

B) interest rates and the income velocity of money will both decrease

C) interest rates will increase but the income velocity of money will decrease

D) interest rates will increase but the income velocity of money will remain the same 10According to the quantity theory of money, in the long run

A) the behavior of velocity is hard to predict

B) a change in money supply will be followed by a proportional change in the price level

C) an increase in nominal money supply will result in a proportional decrease in velocity

D) an increase in nominal money supply will result in a proportional increase in velocity