國立高雄第一科技大學管理學院暨財金學院 學年度第 2 學期經濟學期末會考題目卷 ( A )

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1 國立高雄第一科技大學管理學院暨財金學院 學年度第 2 學期經濟學期末會考題目卷 ( A ) I. Money and Monetary System 1. Consider the following traders who meet Bill has an eggplant wants a head of cabbage Tim has a head of lettuce wants a cucumber Mike has a tomato wants an eggplant Amy has a cucumber wants a head of lettuce Which, if any, pairs of traders has a double coincidence of wants? A. Bill with Mike B. Tim with Amy C. Bill with Mike, and Tim with Amy D. Bill with Tim, and Mike with Amy 2. The existence of money leads to A. greater specialization in production, but not to a higher standard of living. B. a higher standard of living, but not to greater specialization. C. neither greater specialization nor to a higher standard of living. D. greater specialization and to a higher standard of living. 3. You saved $500 in currency in your piggy bank to purchase a new laptop. The $500 you kept in your piggy bank illustrates money s function as a. The laptop s price is posted as $500. The $500 price illustrates money s function as a. You use the $500 to purchase the laptop. This transaction illustrates money s function as a. A. store of value, medium of exchange, unit of account B. store of value, unit of account, medium of exchange C. medium of exchange, unit of account, store of value D. medium of exchange, store of value, unit of account 4. Prisoners sometimes determine a single good to be used as money. This good becomes A. a medium of exchange and a unit of account. B. a medium of exchange, but not a unit of account. C. a unit of account, but not a medium of exchange. D. neither a unit of account nor a medium of exchange. 5. According to the article Why Gold?, silver may be used as money. One problem with using silver as money is that A. silver is too abundant. B. silver tarnishes over time. C. it is not a precious metal. D. it has a high melting point. 6. Inflation can be measured by the A. change in the consumer price index. Inflation in the U.S. has averaged about 2.5% over the last 80 years. B. change in the consumer price index. Inflation in the U.S. has averaged about 4% over the last 80 years. C. percentage change in the consumer price index. Inflation in the U.S. has averaged about 3.6% over the last 80 years. D. percentage change in the consumer price index. Inflation in the U.S. has averaged about 4% over the last 80 years. 7. If the value of a dollar falls, then the quantity of money demanded A. rises, meaning people want to hold more of their wealth in a liquid form. B. rises, meaning people desire to work more so their income rises. C. falls, meaning people want to hold less of their wealth in a liquid form. D. falls, meaning people want to work less so their income falls. 8. If V and M are constant and Y doubles, the quantity equation implies that the price level A. falls to half its original level. B. does not change. C. doubles. D. more than doubles. 1

2 9. Which of the following is correct? A. The Continental Congress used the inflation tax to help finance the American Revolution. B. The inflation is today a principal source of revenue for the U.S. government. C. There is no way a person can avoid the inflation tax. D. Governments can only raise revenues through taxation. 10. In the United States, currency holdings per person average about A. $110; one explanation for this relatively small average is that many people use credit and debit cards to make transactions. B. $110; one explanation for this relatively small average is that U.S. citizens hold a lot of foreign currency. C. $4,490; one explanation for this relatively large average is that U.S. citizens D. $4,490; one explanation for this relatively large amount is that criminals probably prefer currency as a medium of exchange. 11. At the Federal Reserve, A. the nation s monetary and fiscal policies are made by the Federal Open Market Committee, which meets about every six weeks. B. the nation s monetary and fiscal policies are made by the Federal Open Market Committee, which meets twice a year. C. the nation s monetary policy is made by the Federal Open Market Committee, which meets about every six weeks. D. the nation s monetary policy is made by the Federal Open Market Committee, which meets twice a year. 12. Which of the following is not correct? A. The regional Federal Reserve Banks play a role in regulating banks and ensuring the health of the banking system. B. The President of the New York Federal Reserve Regional Bank always gets to vote on the decisions made by the Federal Open Market Committee. C. U.S. monetary policy is made by the Federal Open Market Committee. D. The Federal Open Market Committee meets every 12 weeks. 13. If the Federal Open Market Committee decides to increase the money supply, then the Federal Reserve A. creates dollars and uses them to purchase government bonds from the public. B. sells government bonds from its portfolio to the public. C. creates dollars and uses them to purchase various types of stocks and bonds from the public. D. sells various types of stocks and bonds from its portfolio to the public. 14. According to the assumptions of the quantity theory of money, if the money supply increases 5 percent, then A. both the price level and real GDP would rise by 5 percent. B. both the price level and real GDP would be unchanged. C. the price level would be unchanged and real GDP would rise by 5 percent. D. the price level would rise by 5 percent and real GDP would be unchanged. 15. The payments you make on your automobile loan are given in terms of dollars. As prices rise you notice you give up fewer goods to make your payments. A. The dollar amount you pay is a nominal value. The number of goods you give up is a real value. B. The dollar amount you pay is a real value. The number of goods you give up is a nominal value. C. Both the dollar amount you pay and the goods you give up are nominal values. D. Both the dollar amount you pay and the goods you give up are real values. 16. Over the last 80 years, the average annual U.S. inflation rate was about A. 3.6 percent, implying that prices have increased 16-fold. B. 4 percent, implying that prices have increased 17-fold. C. 4 percent, implying that prices have increased 16-fold. D. 3.6 percent, implying that prices increased about 17-fold. 17. When the money market is drawn with the value of money on the vertical axis, if the Federal Reserve buys bonds, then the money supply curve A. shifts rightward, causing the value of money measured in terms of goods and services to rise. B. shifts rightward, causing the value of money measured in terms of goods and services to fall. C. shifts leftward, causing the value of money measured in terms of goods and services to rise. D. shifts leftward, causing the value of money measured in terms of goods and services to fall. 2

3 18. The manager of the bank where you work tells you that your bank has $6 million in excess reserves. She also tells you that the bank has $400 million in deposits and $362 million dollars in loans. Given this information you find that the reserve requirement must be A. 44/400. B. 6/362. C. 38/400. D. 32/ If people decide to hold more currency relative to deposits, the money supply A. falls. The larger the reserve ratio is, the more the money supply falls. B. rises. The larger the reserve ratio is, the less the money supply rises. C. rises. The larger the reserve ratio is, the more the money supply rises. D. falls. The larger the reserve ratio is, the less the money supply falls. 20. Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the A. money supply to fall. To reduce the impact of this the Fed could lower the discount rate. B. money supply to fall. To reduce the impact of this the Fed could raise the discount rate. C. money supply to rise. To reduce the impact of this the Fed could lower the discount rate. D. money supply to rise. To reduce the impact of this the Fed could raise the discount rate. 21. The Soviet government in the 1980 s never abandoned the ruble as the official currency. However, the people of Moscow preferred to accept A. cigarettes in exchange for goods and services, because they were convinced that cigarettes were going to soon become hard to come by. B. American dollars in exchange for goods and services, because rubles were extremely hard to come by. C. goods such as cigarettes or American dollars in exchange for goods and services, reminding us of the fact that government decree by itself is not sufficient for the success of a commodity money. D. All of the above are correct. 22. There is evidence that the rate at which money changed hands rose during the German hyperinflation. This means that A. velocity rose. If monetary neutrality holds the rise in velocity increased the ratio M/P. B. velocity rose. If monetary neutrality holds the rise in velocity decreased the ratio M/P. C. velocity fell. If monetary neutrality holds the fall in velocity increased the ratio M/P. D. velocity fell. If monetary neutrality holds the fall in velocity decreased the ratio M/P. 23. You put money into an account and earn an after-tax real interest rate of 2.5 percent. If the nominal interest rate on the account is 8 percent and the inflation rate is 2 percent, then what is the tax rate? A percent B percent C percent D percent 24. When the money market is drawn with the value of money on the vertical axis, if the price level is above the equilibrium level, there is an A. excess demand for money, so the price level will rise. B. excess demand for money, so the price level will fall. C. excess supply of money, so the price level will rise. D. excess supply of money, so the price level will fall. 25. When the money market is drawn with the value of money on the vertical axis, if money supply and money demand both shift to the right A. the price level must have risen B. the price level must have fallen. C. the price level rises if money supply shifts farther than money demand. D. the price level falls if money supply shifts farther than money demand. 3

4 II. Open-Economy Macroeconomics: Foreign Exchange Markets 26. An open economy's GDP is always given by A. Y = C + I + G. B. Y = C + I + G + T. C. Y = C + I + G + S. D. Y = C + I + G + NX. 27. Which of the following equations is correct? A. S = I + C B. S = I - NX C. S = I + NCO D. S = NX NCO. 28. All saving in the U.S. economy shows up as A. investment in the U.S. economy. B. U.S. net capital outflow. C. either investment in the U.S. economy or U.S. net capital outflow. D. None of the above is correct. 29. Which of the following is an example of U.S. foreign portfolio investment? A. Disney builds a new amusement park near Barcelona, Spain. B. A U.S. citizen buys bonds issued by the British government. C. A Dutch hotel chain opens a new hotel in the United States. D. A citizen of Singapore buys a bond issued by a U.S. corporation. 30. If Norway sold more goods and services abroad than it purchased from abroad, then it had A. positive net exports which is a trade surplus. B. positive net exports which is a trade deficit. C. negative net exports which is a trade surplus. D. negative net exports which is a trade deficit. 31. A country sells more to foreign countries than it buys from them. It has A. a trade surplus and positive net exports. B. a trade surplus and negative net exports. C. a trade deficit and positive net exports. D. a trade deficit and negative net exports. 32. Net capital outflow equals the purchase of A. foreign assets by domestic residents. B. domestic assets by foreign residents. C. domestic assets by foreign residents - the purchase of foreign assets by domestic residents D. foreign assets by domestic residents - the purchase of domestic assets by foreign residents 33. A company in Panama pays for a U.S. architect to design a factory building. By itself this transaction A. increases U.S. exports and so increases the U.S. trade balance. B. increases U.S. exports and so decreases the U.S. trade balance. C. increases U.S. imports and so increases the U.S. trade balance. D. increases U.S. imports and so decreases the U.S. trade balance. 34. In an open economy, the demand for loanable funds comes from A. only those who want to buy domestic capital goods. B. only those who want to buy foreign assets. C. those who want to buy either domestic capital goods or foreign assets. D. None of the above is correct. 35. In the open-economy macroeconomic model, if net capital outflow increases then A. the demand for dollars in the market for foreign-currency exchange shifts right. B. the demand for dollars in the market for foreign-currency exchange shifts left. C. the supply of dollars in the market for foreign-currency exchange shifts right. D. the supply of dollars in the market for foreign-currency exchange shifts left. 4

5 36. The real exchange rate measures the A. price of domestic currency relative to foreign currency. B. price of domestic goods relative to the price of foreign goods. C. rate of domestic and foreign interest. D. None of the above is correct. 37. Refer to Figure 1. National saving is represented by the A. demand curve in panel a. B. demand curve in panel c. Figure 1 Refer to this diagram of the open-economy macroeconomic model to answer the questions below. C. supply curve in panel a. D. supply curve in panel c. 38. Refer to Figure 1. Domestic investment plus net capital outflow is represented by the A. demand curve in panel a. B. demand curve in panel c. C. supply curve in panel a. D. None of the above is correct. 39. Refer to Figure 1. At an interest rate of 4 percent, the diagram indicates that A. there is a surplus in the market for foreign-currency exchange. B. national saving equals domestic investment. C. net capital outflow + domestic investment = national saving. D. in the market for foreign-currency exchange the quantity of dollars supplied equals the quantity of dollars demanded. 40. Refer to Figure 1. The curve in panel b shows that as the interest rate rises, A. domestic investment declines. B. net capital outflow declines. C. net capital outflow and domestic investment decline. D. None of the above is correct. 41. Refer to Figure 1. Which curve is determined by net capital outflow only? A. the demand curve in panel a. B. the demand curve in panel c. C. the supply curve in panel a. D. the supply curve in panel c. 42. Which of the following both reduce net exports? A. exports rise, imports rise B. exports rise, imports fall C. exports fall, imports rise D. exports fall, imports fall 5

6 43. If the demand for dollars in the market for foreign-currency exchange shifts left, then the exchange rate A. rises and the quantity of dollars exchanged rises. B. rises and the quantity of dollars exchanged does not change. C. falls and the quantity of dollars exchanged falls. D. falls and the quantity of dollars exchanged does not change. 44. In the open-economy macroeconomic model, the key determinant of net capital outflow is the A. nominal exchange rate. B. nominal interest rate. C. real exchange rate. D. real interest rate. 45. Because a government budget deficit represents A. negative public saving, it increases national saving. B. negative public saving, it decreases national saving. C. positive public saving, it increases national saving. D. positive public saving, it decreases national saving. 46. When a government increases its budget deficit, then that country s A. supply of loanable funds shifts right. B. supply of loanable funds shifts left. C. demand for loanable funds shifts right. D. demand for loanable funds shifts left. 47. A limit on the quantity of a good produced abroad that can be purchased domestically is called a(n) A. tariff. B. excise tax. C. import quota. D. None of the above is correct. 48. A trade policy is a government policy A. directed toward the goal of improving the tradeoff between equity and efficiency. B. that directly influences the quantity of goods and services that a country imports or exports. C. intended to exploit the tradeoff between inflation and unemployment by altering the budget deficit. D. concerning employment laws. 49. A country has domestic investment of $200 billion. Its citizens purchase $600 of foreign assets and foreign citizens purchase $300 of its assets. What is national saving? A. $400 billion B. $500 billion C. $600 billion D. $800 billion 50. The explanation for the slope of A. the supply of loanable funds curve is based on the logic that a higher real interest rate leads to higher saving. B. the demand for loanable funds curve is based on the logic that a higher interest rate leads to higher saving. C. the supply of loanable funds curve is based on the logic that a higher real interest rate leads to lower saving. D. the demand for loanable funds curve is based on the logic that a higher interest rate leads to lower saving. 6