Macroeconomics

Question 1: Which of the following statements below is primarily positive in nature?
A. The US government should not increase tariffs on Chinese goods, because the Chinese
government will retaliate by increasing tariffs on US goods.
B. The US government should increase tariffs on Chinese goods to make US produced goods
more attractive to domestic consumers
C. Increasing tariffs on Chinese goods reduces the import from China when holding other things
unchanged
D. None of the above.
Question 2: Which of the following statement correctly describes the view of Classical
Economics?
A. Prices are rigid and it takes a long time for prices to adjust to the equilibrium level.
B. The government should combat recessions using expansionary monetary policies.
C. People pursue their own economic self-interests and prices adjust reasonably quickly to
achieve equilibrium in all markets.
D. None of the above.
Please use the information below to answer Question 3~5:
Consider a country that has three firms: FlourInc, SugarInc, and CookieInc. Below are the
transactions (within a year) for these three firms.
FlourInc Transactions:
• Wages paid to employees: $10,000
• Taxes paid to the government: $2,000
• Revenue received from sale of flour to CookieInc: $20,000
• Revenue received from sale of flour to domestic consumers: $3,000
• Revenue received from sale of flour to foreign consumers: $5,000
SugarInc Transactions:
• Wages paid to employees: $7,000
• Taxes paid to the government: $2,000
• Revenue received from sale of sugar to CookieInc: $10,000
• Revenue received from sale of sugar to domestic consumers: $5,000
• Revenue received from sale of sugar to foreign consumers: $8,000
CookieInc Transactions:
• Wages paid to employees: $15,000
• Taxes paid to the government: $5,000
• Flour purchased from FlourInc: $20,000
• Sugar purchased from SugarInc: $10,000
• Revenue received from sale of cookies to domestic consumers: $50,000
Question 3: The value added for CookieInc is:
A. less than or equal to $11,000
B. greater than $11,000, but less than or equal to $17,000
C. greater than $17,000, but less than or equal to $23,000
D. greater than $23,000, but less than or equal to $29,000
E. greater than $29,000
Question 4: The profit for FlourInc is:
A. less than or equal to $11,000
B. greater than $11,000, but less than or equal to $17,000
C. greater than $17,000, but less than or equal to $23,000
D. greater than $23,000, but less than or equal to $29,000
E. greater than $29,000
Question 5: The GDP for this economy is:
A. less than or equal to $68,000
B. greater than $68,000, but less than or equal to $78,000
C. greater than $78,000, but less than or equal to $88,000
D. greater than $88,000, but less than or equal to $98,000
E. greater than $98,000
Please use the information below to answer Question 6~8:
You are given the following information about a country:
Consumption=200;
GNP=300;
Exports=60;
Imports=40;
Taxes=20;
Government purchase=10;
Government transfer=10;
Interest payments from the government to domestic private sector=20 (the government pays
zero to foreign sectors);
Factor income received from the rest of world=30;
Factor payments made to the rest of world=45;
Question 6: The GDP is:
A. less than or equal to 300
B. greater than 300 but less than or equal to 310
C. greater than 310 but less than or equal to 320
D. greater than 320 but less than or equal to 330
E. greater than 330
Question 7: The investment is:
A. less than or equal to 0
B. greater than 0 but less than or equal to 30
C. greater than 30 but less than or equal to 60
D. greater than 60 but less than or equal to 90
E. greater than 90
Question 8: The private saving is:
A. less than or equal to 0
B. greater than 0 but less than or equal to 30
C. greater than 30 but less than or equal to 60
D. greater than 60 but less than or equal to 90
E. greater than 90
Please use the information below to answer Question 9~12:
Consider a country that produces oranges, apples, pears, and plums, and it has published the
following macroeconomic data, where quantities are in pounds and prices are in dollars per
pound
Year 1 Year 2
Quantity Price Quantity Price
Orange 2,000 1.50 3,000 1.00
Apple 1,500 2.00 2,500 3.00
Pear 2,000 3.00 1,500 4.00
Plum 3,000 0.50 3,500 0.50
Question 9: The nominal GDP for Year 1 is ______:
A. less than or equal to 11,000
B. greater than 11,000 but less than or equal to 12,000
C. greater than 12,000 but less than or equal to 13,000
D. greater than 13,000 but less than or equal to 14,000
E. greater than 14,000
Question 10: Assuming Year 1 is the base year, the real GDP for Year 2 is:
A. less than or equal to 11,000
B. greater than 11,000 but less than or equal to 12,000
C. greater than 12,000 but less than or equal to 13,000
D. greater than 13,000 but less than or equal to 14,000
E. greater than 14,000
Question 11: Assuming Year 1 is the base year, between Year 1 and Year 2, the growth rate of
real GDP is:
A. less than or equal to -5%
B. greater than -5% but less than or equal to 5%
C. greater than 5% but less than or equal to 15%
D. greater than 15% but less than or equal to 25%
E. greater than 25%
Question 12: Assuming Year 1 is the base year, the GDP deflator for Year 2 is:
A. less than or equal to 80
B. greater than 80 but less than or equal to 90
C. greater than 90 but less than or equal to 100
D. greater than 100 but less than or equal to 110
E. greater than 110
Please use the following information to answer Question 13~15:
Suppose you have $1000 side money. You have two options: spend this money today, or save it
for the future. You are offered the following investment opportunity that if you lend the $1000
out today, you will receive $1150 dollars one year later. You think this is a good deal, accept it,
and lend your money out. To keep a track of the price level, you check the Bureau of Labor
Statistics webpage, and find that the CPI for today is 500.

Question 13: Suppose you expect the CPI to increase to 520 one year from today, the expected
real interest rate from this investment is:
A. less than or equal to 4%
B. greater than 4% but less than or equal to 8%
C. greater than 8% but less than or equal to 12%
D. greater than 12% but less than or equal to 16%
E. greater than 16%
Question 14: One year later, it turns out that the CPI increases to 550. Your actual real interest
rate from this investment is:
A. less than or equal to 4%
B. greater than 4% but less than or equal to 8%
C. greater than 8% but less than or equal to 12%
D. greater than 12% but less than or equal to 16%
E. greater than 16%
Question 15: You expected the CPI to increase to 520 one year from now, but it turns out that
the CPI indeed rose to 550 after a year. Which of the following statements correctly describes
your situation?
A. The expected real interest rate is greater than the actual real interest rate, and you benefit
from the unanticipated price rise
B. The expected real interest rate is smaller than the actual real interest rate, and you benefit
from the unanticipated price rise
C. The expected real interest rate is greater than the actual real interest rate, and you lose from
the unanticipated price rise
D. The expected real interest rate is smaller than the actual real interest rate, and you lose from
the unanticipated price rise
E. None of the above
Question 16: Which of the following statement correctly describes the property of production
function
A. Other things equal, an increase in productivity reduces marginal product of labor (MPN)
B. Other things equal, an increase in capital input reduces marginal product of labor (MPN)
C. Other things equal, an increase in labor input reduces marginal product of capital (MPK)
D. None of the above

Please use the information below to answer Question 17~20:
The Albany Bakery has the following production technology to produce bread. Each bread is
sold for 3 dollars
Number of workers Number of bread produced
0 0
1 12
2 23
3 33
4 42
5 50
6 57
7 63
8 68
9 72
10 75
11 77
Question 17: The marginal product of labor for the 2nd worker is
A. less than or equal to 4
B. more than 4, but less than or equal to 6
C. more than 6, but less than or equal to 8
D. more than 8, but less than or equal to 10
E. more than 10
Question 18: If the real wage is 3 pieces of bread per worker, the number of workers hired by
Albany Bakery is _______
A. less than or equal to 4
B. more than 4, but less than or equal to 6
C. more than 6, but less than or equal to 8
D. more than 8, but less than or equal to 10
E. more than 10
Question 19: If the nominal wage is 15 dollars per worker, the number of workers hired by
Albany Bakery is _______
A. less than or equal to 4
B. more than 4, but less than or equal to 6
C. more than 6, but less than or equal to 8
D. more than 8, but less than or equal to 10
E. more than 10
Question 20: If the company hires 7 workers, which of the following could be the nominal wage
rate?
A. $5 B.$11 C. $17 D. $25 E.$29