Macroeconomics-习题集.doc

习题集一Question 1In Australia ,using 2000-01 as the base year, we would find that:a) Nominal GDP is always larger than real GDP.b) Real GDP is always larger than nominal GDP for the period 1960 to 2000.c) Real GDP is larger than nominal GDP from 1998 to 2002.d) Real GDP is smaller than nominal GDP from 1988 to 1995.e) Real GDP and nominal GDP would be equal for the entire period.Note: please see figure 2.1 on page 31 of the te*t book.Question 2During the date 1990s, Japan e*perienced reductions in the GDP deflator. Given this information, we know with certainty that:a) Real GDP fell during these periods.b) Real GDP did not change during these periods.c) The overall price level in Japan decreased during these periods.d) Both real GDP and the overall price level decreased during these periods.Question 3Suppose that in January 2003 in Australia, 200 million people are working, 20 million are not working but are looking for work, and 40 million are not working and have given up looking for work. The official unemployment rate for that month is:a) 7.7%b) 9.1%c) 10%d) 23%e) 30%Question 4A country using the Australian system of unemployment statistics has 100 million people, of whom 50 million are working age. Of these 50 million, 20 million have jobs. Of the remainder: 10 million are actively searching for jobs; 10 million would like jobs but are not searching; and 10 million do not want jobs at all.The labour force is:a) 10 millionb) 20 millionc) 30 milliond) 40 millione) 50 millionQuestion 5Suppose the consumption equation is represented by the following: C=100+ .75YD. The multiplier in this economy is_.a) 0.25b) 0.75c) 1.33d) 2e) 4Question 6The parado* of saving suggests that an increase in the desire to save will cause:a) An incease in equilibrium GDP.b) A reduction in GDP.c) An increase in the desire to invest.d) No change in equilibrium GDP.e) A permanent increase in the level of saving.Note: Please see definition of " parado* of saving on page 674 of the te*t book.( saving SYS(S=Y-T-C) so,saving is unchanged)Question 7When C= C0+C1YD, an increase in C0 will cause which of the following to increase"a) Equilibrium ineb) Equilibrium disposable inec) Equilibrium savingd) All of the abovee) None of the aboveQuestion 8Suppose the central bank wishes to conduct e*pansionary monetary policy. Given this, we would e*pect which of the following to occur"a) A central bank purchase of bonds and an increase in the interest rateb) A central bank purchase of bonds and a reduction in the interest ratec) A central bank sale of bonds and an increase in the interest rated) A central bank sale of bonds and a reduction in the interest rateQuestion 9Suppose the money supply decreased. Which of the following events could cause this"a) An increase in the monetary baseb) A decrease in the ratio of reserves to depositsc) A shift in public preferences away from currency toward current account depositsd) All of the abovee) None of the aboveQuestion 10Suppose there is an open market sale of bonds. Such an event will cause:a) An increase in bond prices and an increase in the interest rate(i)b) A reduction in bond prices and an increase in i.c) An increase in bond prices and a reduction in i.d) A reduction in abond prices and a reduction in i.e) None of the aboveQuestion 11After a contractionary fiscal policy:a) The LM curve shifts and we move along the IS curve.b) The IS curve shifts and we move along the LM curve.c) Both the IS and LM curve shift.d) Neither the IS nor the LM curve shifts.e) Output will change causing a chage in money demand and a shift of the LM curve.Quetsion 12Suppose there is a ta* cut. Which of the following represents the plete list of variables that must increase in response to this ta* cut"a) Consumptionb) Consumption and investmentc) Consumption, investment and outputd) Consumption and outpute) Consumption, output and the interest rateQuestion 13If efficiency wage theory is valid,we would e*pect a relatively high premium over the reservation wage when:a) The unemployment rate is high.b) The job requires very little training.c) Workers cannot be easily monitored.d) Workers have few other options for employment in the area.e) All of the aboveQuestion 14The natural level of output is the level of output that occurs when:a) The goods market is in equilibrium.b) The economy is operating at the unemployment rate consistent with both the wage-setting and price-setting equations.c) The financial markets are in equilibrium.d) The unemployment rate is zero.e) Both the goods and financial markets are in equilibrium.Question 15Use the following Phillips curve equation to answer this question:t -t-1=(+z)-ut.A permanent reduction in the unemployment rate causes:a) An increase in the markup over labour costs.b) A decrease in the markup over labour costs.c) An increase in the inflation rate over time.d) A decrease in the inflation rate over time.e) None of the aboveQuestion 16If policymakers underestimate the natural rate of unemployment, they may follow policies that cause Australia to have:a) More unemployment than necessary.b) An unemployment rate that is "to highc) A higher inflation rate than necessary.d) A steadily decreasing inflation rate.e) A dramatically fluctuating unemployment rate.Question 17Based on a dynamic AD relation when the central bank controls nominal money, output growth will equal zero when which of the following conditions is satisfied"a) 0% nominal money growth; 4% inflationb) 4% nonminal money growth; 0% inflationc) -4% nominal money growth; 3% inflationd) 4% nominal money growth; 4% inflatione) None of the aboveNote: dynamic AD relation: gy = gm - p. So, if gm = p = 4%, gy = 0.Question 18In the medium run, a reduction in the rate of inflation target will cause:a) An increase in the size of the sacrifice ratio.b) A reduction in the size of the sacrifice ratio.c) A reduction in adjusted money growth.d) A reduction in the rate of inflation.e) Both C and DNote: Please see figure 9.3 on page 217 of the te*t book.Question 19Which of the following will increase the steady-state growth rate of capital"a) An increase in the saving rateb) An increase in the population growth ratec) A temporary increase in technological progressd) All of the abovee) None of the aboveNote: Please see figure 12.3 on page 282 of the te*t book.Question 20Which of the following has been proposed as an e*planation for the slowdown in technological progress since the mid-1970s"a) Measurement errorb) A dicline in manufacturings share in GDPc) A decline in spending on research and developmentd) All of the abovee) None of the aboveNote: Please see page 272- 274 of the te*t book of the last year.Question 21Which of the following is true whenever the inflation rate is positve"a) The real interest rate must be greater than the nominal interest rate.b) The real interest rate must be negative.c) The real interest rate must be positive.d) The nominal interest rate must be negative.e) None of the aboveQuestion 22If the nominal interest rate in 20% per year, how much money can an individual borrow today if she wants to repay $200 in one year"a) $240.00b) $150.00c) $160.00d) $166.67e) $180.00Note: 200/(1+20%) = $166.67Question 23Assume that the yield curve is downward-sloping yield curve. This suggests that financial market participants e*pect short-term interest rates to:a) Increase in the future.b) Decrease in the future.c) Be unstable in the future.d) Not change in the future.e) Rise in the near future, and fall in the more distant future.Question 24In general, when the short-term interest rates decrease, long-term rates will:a) Increaseb) Remain the same.c) Decrease by more than the short-term rate.d) Decrease by the same amount as the short-term rate.e) Decrease, but by less than the short-term rate.Question 25Which of following represents non-human wealth"a) Total wealth minus the present discounted value of e*pected future after-ta* labour ineb) Total wealth minus financial wealthc) Wealth that cannot be taken from a person, by lawd) Financial wealth minus housing wealthe) Total wealth minuse housing wealthQuestion 26Suppose individuals e*pect that interest rates will rise in the future. Also assume that the RBA wants to prevent any change in current output. Given this goal of the RBA, the RBA should implement a plocy in the current period that:a) Shifts the IS cruve rightward.b) Shifts the IS curve leftward.c) Shifts the IS curve leftward and the LM curve upward.d) Shifts the LM curve upward.e) Shifts the LM curve downward.Question 27Suppose there is a real appreciation of the Australian dollar. Which of the following may have occurred"a) Foreign currency has bee less e*pensive in the Australian dollars.b) Foreign goods have bee more e*pensive to Americans.c) The foreign price level has increased relative to the Australian price level.d) All of the abovee) None of the aboveNote: e = EP/ P*Question 28An increase in the real e*change rate indicates that:a) Foreign goods are now relatively cheaper.b) Foreign goods are now relatively more e*pensive.c) Domestic goods are now relatively more e*pensive.d) Both A and CNote: e = EP/ P*. so P or P* eQuestion 29Suppose there is a reduction in foreign output(Y*). This reduction in Y* will cause which of the following in the domestic country"a) A reduction in outputb) A reduction in consumptionc) A reduction in net e*portsd) All of the abovee) None of the aboveNote : (1) Y* *N*ZY (2) C = c0 + c1(Y -T)Question 30Suppose net e*ports are postive(N*>0) for a country. Given this information, we know that:a) Demand for domestic goods will be equal to the domestic demand for goods.b) Demand for domestic goods will be greater than the domestic demand for goods.c) Demand for domestic goods will be less than the domestic demand for goods.d) A budget surplus e*ists.Note : domestic demand for goods: DD = C+I+Gdemand for domestic goods: ZZ = C+I+G+N* = DD + N*Question 31In an open economy under fle*ible e*change rates, a reduction in the interest rate will cause an increase in which of the follwing"a) Investmentb) E*portsc) Net e*portsd) All of the abovee) None of the aboveQuestion 32Suppose a country inplements simultaneously a fiscal e*pansion and monetary contraction. In a fle*ible e*changerate regime, we know with certainty that:a) The e*change rate and output would both increase.b) The e*change rate would increase and output would decrease.c) The e*change rate would increase.d) The e*change rate would decrease output would increase.Question 33Which of the following e*plains why the Great Depression did not end sooner"a) An increase in the nominal money stockb) An increase in the price levelc) The presence of a liquidity trapd) All of the abovee) None of the aboveQuestion 34In the IS-LM model, an increase in the e*pected rate of deflation will cause:a) An increase in demand.b) An increase in the nominal interest rate.c) An increase in the real interest rate.d) An increase in the nominal money supply.e) A decrease in the nominal money supply.Note: r i - pe Question 35A dangerous sign for hyperinflation is when the government finances a growing proportion of its budget deficit through:a) Monetisationb) Ta* collections.c) Bonds sold to foreigners.d) Bonds sold to domestic citizens.e) Voluntary contributions.Question 36Seignorage, the revenue from money creation, equals which of the following"a) The rate of inflationb) The rate of inflation times real money balancesc) Real money balancesd) The percentage growth rate of real moneye) The percentage growth rate of nominal money times real money balancesNote : Seignorage =M/P = (M/M)(M/P)Question 37Due to uncertainty about the impact of monetary policy, it would be best for the central bank to increase money growth:a) 3 months after the start of a recession.b) By more than the increase that will get the desired response.c) By less than the increase that will get the desired response.d) Only when it can be certain about the value of Okuns coefficient and the timing of its impacts.e) Only after it is centain that the economy has entered a recession.Question 38The problem of time inconsistency in macro policy suggests that a nation might be better off:a) Using fiscal and monetary policy to fine tune the economy.b) Reducing the independence of the central bank.c) Appointing someone who is more conservative than the rest of the government to head the central bank.d) Intervening frequently in the foreign e*change market.e) Eliminating rational e*pectations from econometric models used for forecasting.Question 39According to Keynes:a) The Great Depression was caused by ill-considered e*pansionary fiscal policy.b) Balancing the budget in the midst of a depression would be a serious mistake.c) Inflation is always and everywhere a monetary phenomenon.d) The Phillips curve is stable.e) None of the aboveQuestion 40Which of the following events led to the crisis in macroeconomics and to the development of rational e*pectations theory"a) The Great Depressionb) The stock market crash of 1987c) The stock market speculative bubble of the late 1990sd) Stagflation in the 1970se) Large budget deficits in the 1980s.Question 41E*plain the concept of neutrality of money.( please see p673 of the te*t book and the slides of module 3(cont.). )Question 42E*plain the concept of time inconsistency.( please see the slides of module 6 (cont.) )Question 43Define each of the following terms:a) Okuns Lawb) Sacrifice ratioc) Financial wealthQuestion 44Suppose some countries have been e*periencing a slow-down in economic growth for last 2years. The slow-down was associated with a downturn in consumer confidence. The governments of these countries are thinking to implement e*pansionary fiscal and monetary policies (by increasing government e*penditure and reducing interest rates) to overe the situation. Using an IS-LM model, analyse the slow-down in growth and the short run effects of e*pansionary fiscal and monetary policies.Answer: ( please draw the Is and LM curve )Question 45a) Consider an economy with output below the natural level and the nominal interest rate equal to zero. Illustrate this economy in an IS-LM diagram.b) Under normal circumstances, how does the economy return to the naural level of output" Does this adjustment mechanism wo