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(ECON2123)[2012](f)final~zhuangab^_76044.pdf
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Multiple Choices

1. If a Hong Kong construction company hire local Chinese worker to built a road in mainland China, this activity would be

A) fully included in Mainland GNP
B) fully included in Mainland GDP.
C) excluded from Hong Kong GNP.
D) included in Hong Kong GDP but not in Hong Kong GNP.

2. Suppose consumption C=100+0.5YD and Investment I=100. Every things equal, an increase in the propensity to consume from 0.5 to 0.75 will definitely lead to

A) a decrease in total saving.
B) the effects on both total saving and consumption are unknown.
C) an increase in consumption.
D) a decrease in consumption.

3. Every other thing equal, an increase in the risk of investment return would cause the IS curve to

A) remain unchanged
B) shift down and to the left
C) shift up and to the right
D) remain unchanged if the risk is small.

4. Suppose investment spending is very not sensitive to the interest rate. Given this information, we know that:

A) the IS curve should be relatively steep
B) the IS curve should be relatively flat
C) the LM curve should be relatively flat
D) the LM curve should be relatively steep

5. According to IS-LM model, under which circumstance, the increase in money is most effective in boosting the economy?

A) investment is not sensitive to output change at all.
B) IS curve is vertical
C) IS curve is flat
D) Investment is fixed.

6. For this question, assume that individuals hold NO currency (i.e., c = 0.0). If the ratio of reserves to deposits is .25, a purchase of $1000 of bond by the central bank will leads to ____increase in money supply:

A) $4000 B) $3000 C) $5000 D) $1000


7. Based on our understanding of the labor market model presented in Chapter 6, the new labor law in China which increases the protection of workers to be laid off would leads to :

A) a reduction in the equilibrium real wage
B) an increase in the equilibrium real wage
C) a reduction in the natural rate of unemployment
D) an increase in the natural rate of unemployment

8. Based on our understanding of the labor market model presented in Chapter 6, an increase in oil price will make,

A) a reduction in the equilibrium unemployment rate
B) a rise in the real wage
C) a rise in the aggregate price
D) a rise in natural rate of output

9. Based on your understanding of the AS/AD model, which of the following is an INCORRECT statement about the short-run adjustment process for the macro economy?

A) A reduction in employment leads to lower prices
B) An increase in output above the natural level leads to higher nominal wages
C) Output in excess of the natural level leads to higher prices
D) none of the above

10. Based on your understanding of the AS/AD model, an permanently reduction in government spending will lead to ___in the medium run

A) an increase in consumption
B) a decrease