11. In a certain economy, when income is $1000, consumer spending is $800, The value of the multiplier for this economy is 2.5. It follows that, when income is $1060, consurner spending is
(A) $815.
(B) $836.
(C) $900.
(D) $950. 

7. John and Ethan both work eight hours a day. In one day, John can make 4 cakes or 8 ice cream, whereas Ethan can make 2 cakes or 5 ice cream. Given this, which statement(s) is (are) correct? (i) Ethan has a lower opportunity cost in producing ice cream than John. (ii) John has an absolute advantage in producing both goods. (iii) It is not beneficial for John to trade with Ethan. (A) (i) and (ii) (B) (i) and (ii) (C) (ii) and (ii) (D)(i),(ii), and (iii)

8. Which following statement(s) is (are) correct? (i) A Giffen good is always an inferior good. (ii) A Giffen good is a good that its income effect is larger than its substitution effect. (A) (i) (B) (ii) (C) (i) and (ii) (D) None of the above is correct.

9. John, Ethan, and Mary decide to buy a bike together and share the ownership. There willingness to pay for each choice is in the following table They will choose the bike that all three agree to buy.Which following statement(s) is(are) correct? (i) The bike will be a publie good among them.(ii) If three people share the cost and all bikes have the same price, $1500, the choice that maximizes aggregate surplus will be chosen. (A) (i) (B) (ii) (C) (i) and (ii) (D) None of the above is correct.

10. Suppose Country A proposes to impose a tax on a good. One report from an economist argues that this tax will increase producers' before-tax total revenue and make the producers bear relatively more tax burden than consumers. Which following statement is correct for the good? (A) The price elasticity of demand is 1.8； the price elasticity of supply is 0.8. (B) The price elasticity of demand is O.9； the price elasticity of supply is 0.3. (C) The price elasticity of demand is 0.6； the price elasticity of supply is 1.4. (D) There is not enough information to answer the question.

12. Which of the following is not a reason that paying eficiency wages may increase a frm's profit? (A) Efficiency wages increase worker health and therefore increase worker productivity. (B) Efficiency wages decrease worker turnover and therefore decrease hiring and training costs. (C) Efficiency wages decrease worker shirking and therefore increase worker productivity. (D) Eficiency wages are below the equilibrium wage rate but still attract high quality workers.

13. If the Federal Reserve accommodates an adverse supply shock, (A) infation expectations may rise which shifts the short-run Phillips curve shifts right. (B) infation expectations may rise which shifts the short-run Phillips curve shifts left. (C) infation expectations may fall which shifts the short-run Phillips curve shifts right. (D) infation expectations may fall which shifts the short-run Phillips curve shifts left.

14. If a local bank decides to convert some of its U.S. Treasury securities into cash, which it will hold in its vault, what impact will this have on the bank's balance sheet? (A) Reserves would increase, liabilities would stay the same, and owner's equity would decrease. (B) Reserves would increase, lhabilities would stay the same, and owner's equity would increase. (C) Reserves would decrease, liabilities would decrease, and owner's equity would decrease. (D) Reserves would decrease, liabilities would stay the same, and owner's equity would decrease.

15. Matilda just graduated from college. In order to devote all her efforts to college, she didn't hold a job. She is going to tour around the country on her motorcycle for a month before she starts looking for work. Other things the same, the unemployment rate (A) increases, and the labor-force participation rate decreases. (B) and the labor-force participation rate both increase. (C) increases, and the labor-force participation rate is unaffected. (D) and the labor-force participation rate are both unaffected.

16. In an IS-LM model, if the governmentadopts a loose monetary policy and a tight fiscal policy simultaneously, (A) interest rate increases, while output stays the same. (B) interest rate stays the same, while output decrcases. (C) interest rate change is uncertain, while output increases. (D) interest rate decreases, while output changes is uncertain.

17. In a small open economy, a loose fiscal policy coupled with an increase in import tariff will cause domestic currency to (A) increase. (B) decrease. (C) remain the same. (D) change in an uncertain direction.