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Sample questions:
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) Which of the following statement is correct?
A. If the indifference curves are bowed outward, then the marginal rate
of substitution must be diminishing.
B. Indifference curves of a person cannot intersect each other.
C. The slope of the budget-constraint line is positive.
D. None of above.
) Which of the following statement is correct?
A. The substitution effect of a decrease in the price of good X always
leads a consumer to increase his consumption on good X.
B. An increase in the interest rate induces the household to save more if
income effect dominates the substitution.
C. An increase in the wage rate induces the household to increase labor
supply if income effect dominates the substitution.
D. None of above.
) Tsai-Fen is trying to maximize total utility while consuming food and clothing.
Suppose now that her marginal satisfaction from food and clothing are 50 utils
and 30 utils, respectively. If clothing is priced at $10 per unit and the price of
food is equal to $20, then which of following statement is correct?
A. Tsai-Fen should increase her consumption on food.
B. Tsai-Fen should decrease her consumption on food.
C. Tsai-Fen should increase her consumption on other goods (neither clothing
nor food).
D. Tsai-Fen should decrease her consumption on clothing.
) Which of following statement is correct?
A. GDP is always greater than GNP.
B. GDP deflator is calculated by the ratio of Nominal GDP over real GDP
times 100%.
C. Government defense expenditure is not counted in GDP
D. An increase in the oil price will increase Taiwan’s GDP deflator.
) Mary’s boss pays Mary an hour NT$100 in year 2005. Mary’s brother, John,
got paid from his boss NT$ 90 an hour last year. CPI in year 2005 is 120 while
CPI in year 2004 is 110. According to this information, which of the following
statement is correct?
A. John’s real wage is higher than Mary’s real wage.
B. John’s nominal wage is higher than Mary’s nominal wage.
C. John’s real wage is equal to Mary’s real wage.
D. John’s real wage is less than Mary’s real wage.
) Taiwan’s interest rate is climbing now. According to our class, which of the
following is NOT the cause for the increase of Taiwan’s interest rate?
A. Taiwan is under a recession.
B. Taiwan’s inflation rate is climbing.
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C. The government of Taiwan increases its budget deficit.
D. A large number of Taiwanese firms close their Taiwan factories and switch
to China.
) An increase in the discouraged workers will lead to
A. an increase in the unemployment rate reported by the government.
B. an increase in the labor participation rate.
C. an increase in the labor turnover rate.
D. an increase in the employment rate reported by the government.
) If a lender wants a real return of 8 percent and she expects inflation to be 4
percent, which of the following is the nominal interest rate to charge?
A. 4 percent.
B. 6 percent.
C. 2 percent.
D. 12 percent.
) Assume net exports are -$220, consumption is $5,000, tax revenues are $1,000,
government purchases are $1,500, and 1997 GDP, calculated by the expenditures
approach, is $8,000. We can conclude that
A. private investment was $1,940.
B. public investment was $310.
C. private investment was $320.
D. private investment was $1,720.