24. If the CPI basket costs $35 in the base period but costs $42, what is the CPI in the next period?
(A) 83.3
(B) $42
(C)20 percent
(D) 120

25. Which of the following directly creates growth in labor productivity?I. Growth in capital per hour of labor.II. Technological change.III. Population growth.(A) I only (B) II only(C)I and II (D) I and III

26. "Premier Liu Chao-shiuan announced Tuesday a government plan to distribute NT$82.9 billion (US$2.51 billion) in consumption coupons to Taiwan's citizens in a bid to stimulate ... economic growth."www.etaiwannews.com 11/18/2008The Premier's plan to boost economic growth by boosting consumption(A) will work because employment will increase.(B) will work because there will be a movement out along Taiwan's aggregate production function.(C)will not work because real GDP per person will decrease.(D) will not work because economic growth is boosted by labor productivity, not consumption.

27. If foreigners spend more on Taiwan-made goods and services than we spend on theirs,(A) foreigners must borrow from Taiwan or sell Taiwan assets to make up the difference.(B) all Taiwan national saving remains in Taiwan.(C)we must borrow from foreigners because of low imports.(D) funds flow in from abroad to help finance Taiwan investment.

28. Technological progress that increases the expected profit shifts the demand for loanable funds curve(A) leftward and reduces the real interest rate.(B) rightward and increases the real interest rate.(C)rightward and reduces the real interest rate.(D) leftward and increases the real interest rate.

29. You deposit $4,000 in currency in your checking account. The bank holds 20 percent of all deposits as desired reserves. As a direct result of your deposit, your bank will create(A) $200 of new money. (B) $800 of new money.(C)$1,600 of new money. (D) $3,200 of new money.

30. Which of the following decreases the demand for nominal money?(A) a decrease in the nominal interest rate (B) an increase in real GDP(C)an increase in the quantity of money (D) a decrease in the price level

31. Which of the following is a factor that determines the amount of dollars supplied in the foreign exchange market?(A) the exchange rate(B) U.S. interest rate(C)interest rates in foreign countries(D) All of the above affect the number of dollars supplied in the foreign exchange market.

32. The Central Bank lowers interest rates. As a result, in the short run, real GDP ________ and the price level ________.(A) increases; rises (B) increases; falls(C)decreases; rises (D) decreases; falls

33. Suppose that the economy begins at a long-run equilibrium. Which of the following raises the price level and decrease real GDP in the short run?(A) a decrease in the quantity of money(B) an increase in the price of oil that decreases aggregate supply(C)an increase in the stock of capital that increases aggregate supply(D) an increase in government expenditures

34. A monetarist economist believes that(A) if the economy was left alone, it would rarely operate at full employment.(B) the economy is self-regulating and always at full employment.(C)the economy is self-regulating and will normally, though not always, operate at full employment if monetary policy is not erratic.(D) the economy is self-regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic.

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