20. Abe owns a dog; the dog's barking annoys Abe's neighbor, Jenny. Suppose that the benefit of owning the dog is worth $200 to Abe and that Jenny bears a cost of $400 from the barking. Assuming Abe has the legal right to keep the dog, a possible private solution to this problem is that
(A) Jenny pays Abe $150 to give the dog to his parents who live on an isolated farm.
(B) Abe pays Jenny $350 for her inconvenience.
(C) Jenny pays Abe $300 to give the dog to his parents who live on an isolated farm.
(D) There is no private transaction that would improve this situation.

21. An internet radio broadcast is (A) excludable and rival in consumption. (B) excludable and not rival in consumption. (C) not excludable and rival in consumption. (D) not excludable and not rival in consumption.

22. Contractionary monetary policy (A) leads to disinflation and makes the short-run Phillips curve shift right. (B) leads to disinflation but leave the short-run Phillips curve unchanged. (C) leads to disinflation and makes the short-run Phillips curve shift left. (D) does not lead to disinflation but makes the short-run Phillips curve shift left.

23. If there is a temporary adverse supply shock, then the short-run Phillips curve shifts to the (A) right. It remains to the right regardless of monetary policy. (B) right. It remains to the right if the central bank pursues expansionary monetary policy. (C) left. It remains to the left regardless of monetary policy. (D) left. It remains to the left if the central bank pursues expansionary monetary policy.

24. Other things the same, if Taiwan residents chose to travel overseas less due to concerns about the safety of foreign travel, then in the open-economy macroeconomic model (A) the domestic equilibrium real interest rate will increase, and the equilibrium real exchange rate will increase. (B) the domestic equilibrium real interest rate will decrease, and the equilibrium real exchange rate will decrease. (C) the domestic equilibrium real interest rate will increase, and the equilibrium real exchange rate may increase, decrease, or remain unchanged. (D) the domestic equilibrium real interest rate will decrease, and the equilibrium real exchange rate may increase, decrease, or remain unchanged.

25. Other things the same, if foreign residents desired to purchase more Taiwan rice and Taiwan residents buy more US bonds, then in the open-economy macroeconomic model (A) the domestic equilibrium real interest rate will increase, and the equilibrium net export amount will increase. (B) the domestic equilibrium real interest rate will increase, and the equilibrium net export amount will decrease. (C) the domestic equilibrium real interest rate will decrease, the equilibrium net export amount will increase. (D) the domestic equilibrium real interest rate will decrease, and the equilibrium net export amount will decrease.

26. You eat either apples or oranges every day, and have negatively-sloped demand functions of apples and oranges. If apples are on sales, your demand for (A) apples will increase. (B) apples will decrease. (C) oranges will increase. (D) oranges will decrease.

27. In past decade, Taiwanese have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has (A) reduced measured GDP. (B) not affected measured GDP. (C) increased measured GDP by the value of the restaurant meals. (D) increased measured GDP by the value added by the restaurant's preparation and serving of the meals.

28. Suppose the government increases her expenditures which are totally financed by the increase of taxes. In the short run, what happens to the real interest rate, the price level, and real GDP? (A) the real interest rate increases, the price level increases, and real GDP rises. (B) the real interest rate falls, the price level increases, and real GDP rises. (C) the real interest rate increases, the price level falls, and real GDP rises. (D) the real interest rate increases, the price level increases, and real GDP falls.

29. As in question 28, what happens to the real interest rate, the price level, and real GDP in the long run? (A) the real interest rate increases, the price level increases, and real GDP rises. (B) the real interest rate falls, the price level increases, and real GDP unchanged. (C) the real interest rate increases, the price level falls, and real GDP rises. (D) the real interest rate increases, the price level increases, and real GDP unchanged.

30. In the short run, the change in price expectations created by the stock market boom will make (A) the price level increase and real GDP rise. (B) the price level increase and real GDP fall. (C) the price level fall and real GDP rise. (D) the price level fall and real GDP fall.

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