SECTION ONE (Compulsory)：Answer all ten questions in this section. Each question carries 1 mark.
　　1. Multiple-choice questions: from the following four options, select a correct and fill in its labeling the brackets. (A total of 10 points)
　　1. Only what happens if the supply is less than demand? （　　）
　　A. actual price is lower than the equilibrium price
　　B. actual price is higher than the equilibrium price
　　C. equilibrium price equivalent to the actual price
　　D. eliminate the scarcity of goods
　　2. When the Consumer income and established conditions for commodity prices is still, consumers can buy the two commodities to the greatest number of combinations. What did the Line call? （　　）
　　A. No difference curve
　　B. consumption may Line
　　C. Line and its output
　　D. enterprise budget line
　　3. Opportunity cost: （　　）
　　A. Is always measurable in money terms.
　　B. Is an indicator of productivity performance.
　　C. Relates peculiarly to business affairs alone.
　　D. Measures the cost of doing "x" in terms of what else might be done.
　　4. The normal downward slope of demand curves is necessarily explained by: （　　）
　　A. Growth in the size of the population.
　　B. The adroitness of advertisers.
　　C. Limited spending power.
　　D. Technological advance.
　　5. For a closed two-good economy, the output of the two goods should be at the point where: （　　）
　　A. The highest indifference curve touches the production possibility curve.
　　B. The lowest indifference curve touches the production possibility curve.
　　C. The indifference curve crosses the production possibility curve.
　　D. The marginal cost curve touches the production possibility curve.
　　6. The "J-curve" shows that following depreciation: （　　）
　　A. The quantity of exports falls, making the current account balance worse.
　　B. Here is an initial drop in imports but this is later reversed.
　　C. The cost of imports rises immediately from the price effect, worsening the current account bal-ance, but later quantities of imports and exports respond and the current account balance im-proves.
　　D. There is an improvement in the balance of payments so long as the Marshall-Lerner conditions are met.
　　7. Which of the following statements about standby letters of credit is true? :（　　）
　　A. They can serve as a guarantee to a buyer against a seller defaulting
　　B. They are contrary to the general rule that letters of credit may only be used for the actual movement of goods
　　C. They are unlike a tender (or other) bond in their legal standing and method of operation
　　D. They are unlike a tender bond with its fixed expiry date
　　8. What information would you find in a statement of cash flows that you would not be able to get from the other two primary financial statements? （　　）
　　A. Cash provided by or used in financing activities
　　B. Cash balance at the end of the period
　　C. Total liabilities due to creditors at the end of the period
　　D. Net income
　　9. Which of these best describes the U.S. Federal Reserve? （　　）
　　A. Responsible for monetary policy/money supply
　　B. Prints money.
　　C. Keeps the country out of debt.
　　D. Helps people in need.
　　10. What is the basic purpose of profits in our market economy? （　　）
　　A. Pay for wages and salaries of workers.
　　B. Lead businesses to produce what consumers want.
　　C. Transfer income to the wealthy.
　　D. All of the above.
　　SECTION TWO(Compulsory)：Answer the questions in this section.
　　Reading Comprehension: (10 points)
　　Laura James is the head portfolio manager for National Fund, a U.S. based mutual fund with a well-respected track record. National’s primary focus is on large-cap domestic equities, and the fund has consistently posted high returns relative to its peer group over the past seven years. Much of National’s recent success is from its investments in the U.S. automobile industry, which have posted extraordinary returns due to a favorable economic scenario. Over the past seven years, the U.S. economy has been expanding, foreign competition has not met consumer expectations, and oil prices have remained low. These factors have contributed to an increase in market share for the domestic producers (at the expense of foreign competitors), and the result has been strong earnings for the top U.S. automakers.
　　Ford Motor Company, in particular, has enjoyed tremendous success in this environment. Ford has capitalized on the trend toward bigger vehicles, particularly sport utility vehicles (SUVs), and has outperformed the other domestic auto makers. Ford jumped on the SUV bandwagon early, and established its dominance. Other domestic auto makers followed, with foreign producers being the last to embrace the trend. Ford has increased its market share in an increasingly competitive industry.
　　James is constantly reviewing economic forecasts and industry data in order to assess the expected performance of the investments in National’s portfolio. Due to changes in economic policy and recent volatility in energy prices, James now believes that current market conditions exhibit signs of contraction (recession). In addition, the automobile sector may be facing additional negative factors. In particular, James has concerns regarding the SUV segment of the automobile industry. Although she believes they will remain popular, she is concerned that the market may be reaching a point of saturation. In addition, volatile energy prices may dampen consumers’ enthusiasm for large vehicles. Lastly, foreign competitors have increased efforts toward the production of SUVs, thus “crowding” the market with many new models.
　　Part 1)
　　Assume an industry exhibits tendencies of “regression toward the mean.” This could mean all of the following EXCEPT: （　　）
　　A. Profits are high and competition increases from other firms in the industry.
　　B. Profits increase as firms enter the industry.
　　C. Profits are low and firms flee the industry.
　　D. Prices could increase or decrease depending on the level of profits.
　　Part 2)
　　In a recessionary environment, an automaker such as Ford would be expected to: （　　）
　　A. Produce higher end vehicles.
　　B. Maintain the same product mix as 5 years ago.
　　C. Gain market share if it produces high end vehicles.
　　D. Produce lower end vehicles.
　　Part 3)
　　Assume domestic automakers are growing at a rate of –2%. Ford expects to increase its market share by 0.5%. What is Ford’s growth rate? （　　）
　　A. 1.5%.
　　B. -3.0%.
　　C. -1.5%.
　　D. 3.0%.
　　Part 4)
　　Suppose instead that Ford’s growth of firm sales is expected to be –3% and the growth of industry sales is 1%. What is Ford’s expected change in market share? （　　）
　　A. 3%.
　　B. -3%.
　　C. -4%.
　　D. 4%.
　　Part 5)
　　Which of the following scenarios would be most likely to have a positive impact on Ford’s market share? （　　）
　　A. New carmakers enter the market.
　　B. An increase in its marketing budget.
　　C. War with an oil producing country.
　　D. The overall number of cars sold increases.
　　Explanations of terms：(10 points)
　　1. Official interest rate
　　2. Fiat money
　　3. GDP
　　4. Mean
　　5. Primary markets
　　Question3: What are the basic objectives of economic policies?
　　Question4: What is the Money Market Mutual Funds?
　　Question5: Why Should I Lease Equipment Instead of Buy？
　　Quetion6：
　　Tell us The Practice of China’s Monetary Policy since Economic Reform and Opening up briefly?