Macroeconomics-习题集4

习题集四PART AQUESTION 1The definition of the term ‘long run’ is based directly on:1. time.2. macroeconomic adjustment.3. the natural level of output.4. the balance of trade.QUESTION 2The underground economy is:1. a term applied to the mining industry.2. that part of the economy that is not measured in official GDP data owing to illegal activities and tax avoidance.3. the adjustment that should be made to official GDP data owing to environmental degradation.4. the opportunity cost incurred when workers are involuntarily unemployed. QUESTION 3‘Disagreements among macroeconomists can be generated by the different weights they apply to objectives even when their views about how the economy works are the same’. This statement is:1. true.2. false.QUESTION 4In an economy there are 18 million people over 15 years of age, there are 12 million people employed and 3 million people unemployed. The unemployment rate is:1. 10.0 percent.2. 16.7 percent.3. 20.0 percent.4. impossible to calculate without further information.QUESTION 5‘If we assume that the quantity of money is determined by the government as a matter of policy, then the interest rate must remain fixed as the number or value oftransactions changes.’ This statement is:1. true.2. false.QUESTION 6If the net value of the autonomous and policy-determined expenditures in a closed economy is $200 billion and the marginal propensity to consume is 0.8, then equilibrium output is:1. $200 billion.2. $250 billion.3. $800 billion.4. $1,000 billion.5. impossible to calculate without further information, but must be greater than $200 billion.Note: Y = Z（equilibium condition of goods market）→Y = Z C + I + G = c0 + c1(Y-T) + I + G→(1- c1)Y= c0 + I + G - c1T→Y =〔1/ (1- c1) 〕(c0 + I + G - c1T )(c0+ I + G - c1T ) is the net value of the autonomous and policy-determined expenditure.So, Y =〔1/ (1- c1) 〕(c0 + I + G - c1T )=〔1/ (1- 0.8) 〕* ( 200)=1000QUESTION 7For the economy in question 6 above, if income tax levied by the government is a lump sum of $200 billion (T = 200), then equilibrium consumption is:1. $160 billion.2. $200 billion.3. $360 billion.4. $800 billion.5. impossible to calculate without further information, but must be at least equal to $640 billion.Note: C= c0+c1(Y-T)= c0+0.8(1000-200)= c0+640QUESTION 8Macroeconomic models that allow for adjustment over time are called:1. simulation models.2. regression models.3. dynamic models.4. equilibrium models.5. econometric models.QUESTION 9Which of the following lists contains variables that are all stock variables?1. Income, saving, investment.2. Wealth, saving, investment.3. Wealth, savings, quantity of money.4. Savings, quantity of money, investment.QUESTION 10Which of the following statements is true when wealth can be held as money or bonds only and consumption is determined by current income only?1. Demand for money and demand for bonds are independent of each other.2. Other things being equal, an increase in wealth causes the demand for money to increase.3. Other things being equal, an increase in the interest rate leads to an increase in the demand for bonds.4. More than one of the statements above is true.5. None of the above statements is true.QUESTION 11If the central bank purchases government bonds on the open market (open market operations), a macroeconomist would conclude that it wishes to impact:1. aggregate demand.2. real income.3. the nominal interest rate.4. the real interest rate.QUESTION 12The IS relation identifies all combinations of real interest rate and real income at which the:1. goods market is in equilibrium.2. money market is in equilibrium.3. bond market is in equilibrium.4. both the goods and money markets are in equilibrium.5. all of the goods, money and bond markets are in equilibrium.QUESTION 13A decision by a government to increase income tax and reduce government spending simultaneously is:1. fiscal contraction.2. monetary contraction.3. fiscal expansion.4. monetary expansion.QUESTION 14In the IS–LM model an increase in income will cause:1. an increase in consumption.2. an increase in investment.3. an increase in the demand for money.4. both 1 and 2 above.5. all of 1, 2 and 3 above.QUESTION 15‘If the government of a closed economy wished to reduce the interest rate with little or no decline in output, it would combine monetary expansion with fiscal contraction.’ This statement is:1. true.2. false.QUESTION 16In the table below data are provided for selected macroeconomic variables for the former West Germany around the time of unification.Data in the table are consistent with:1. contractionary monetary policy.2. expansionary monetary policy.3. neutral monetary policy.QUESTION 17In the dynamic IS–LM model it is normally assumed that the interest rate:1. and output both adjust slowly.2. and output both adjust quickly.3. adjusts slowly, but output adjusts quickly.4. adjusts quickly, but output adjusts slowly.QUESTION 18If the inflation rate in Australia in 2000 is expected to be 5.5 percent and the nominal interest rate is expected to be 7.5 percent per year, the real interest rate is expected to be approximately:1. –2.0 percent per year.2. zero.3. 2.0 percent per year.4. 5.5 percent per year.5. 7.5 percent per year.QUESTION 19If a shareholder in a business is expecting a real dividend of $550 one year from now, what is the expected present discounted real value of that dividend if the real rate of interest is 10 percent per year now and is expected to remain at that rate?1. $495.2. $500.3. $550.4. it is impossible to calculate expected present discounted real value without knowing the expected rate of inflation.QUESTION 20Other things being equal, in the short run an increase in expected inflation is associated with:1. a decrease in output.2. an increase in output.3. either a decrease or an increase in output depending on the size of the increase in expected inflation.QUESTION 21Which of the following statements may be assumed to be true in macroeconomic modelling?1. Both the IS and LM relations depend on the nominal interest rate.2. The difference between the real interest rates on money and bonds is normally less than the expected inflation rate.3. Money has a zero real interest rate.4. More than one of the statements above is true.5. None of statements above is true.QUESTION 22Consumption is likely to fluctuate:1. less than investment.2. more than investment.3. about as much as investment.QUESTION 23If the expected present discounted present value of a planned investment project is less than the cost of that investment project, a business firm should:1. borrow and proceed with the project.2. proceed with the project only if there are sufficient internal funds to finance the project.3. not proceed with the project.QUESTION 24‘The user cost of capital is equivalent to the initial purchase price of that capital.’ This statement is:1. true.2. false.QUESTION 25In comparing bonds carrying identical risk of default, but having different maturity dates, it is necessary to consider their:1. interest rates.2. yields to maturity.3. yield curves.4. coupon payments.QUESTION 26In recent years share prices on the major stock exchanges around the world have:1. been close to their fundamental values.2. often deviated from their fundamental values.3. been explicable only in terms of fads.4. been explicable only in terms of rational speculative bubbles.QUESTION 27Introducing expectations into the IS–LM model can be expected to make:1. the IS curve steeper without affecting the LM curve.2. the IS curve flatter without affecting the LM curve.3. both the IS curve and the LM curve shift.QUESTION 28The real exchange rate is defined as the:1. price of foreign currency in terms of domestic currency.2. price of foreign goods in terms of domestic goods.3. price of foreign goods divided by the price of domestic goods4. nominal exchange rate divided by the domestic price index.QUESTION 29In the following table some data on the balance of payments for an economy are provided.The current account balance for the economy is:1. –$0.2 billion.2. –$2.2 billion.3. –$2.4 billion.4. +$0.6 billion.5. +$3.0 billion.QUESTION 30If a country with a floating exchange rate has a current account surplus it will have a capital account balance that is:1. positive.2. negative.3. equal to zero.QUESTION 31Assume that the interest parity relation holds. If the interest rate on domestic bonds is less than the interest rate on foreign bonds, the:1. domestic currency is expected to appreciate.2. domestic currency is expected to depreciate.3. expected return on foreign bonds is greater than the expected return on domestic bonds.4. expected return on foreign bonds is less than the expected return on domestic bonds.QUESTION 32If a real depreciation of the exchange rate is to improve the trade balance, it is necessary that the quantity of:1. exports increase.2. imports decrease.3. exports increase and the quantity of imports decrease by enough to compensate for the increase in the price of imports.4. exports increase and the quantity of imports decrease by enough to compensate for the increase in the price of imports and the increase in the government budget deficit.QUESTION 33If total saving and investment in an economy are equal to each other, then net exports will be:1. positive.2. negative.3. zero.4. either positive or negative depending on the nominal exchange rate.Note: NX = S + (T - G) - IQUESTION 34Compared to the closed economy IS curve, the open economy IS curve is:1. steeper.2. flatter.3. neither steeper nor flatter.QUESTION 35In most high income economies wages are determined by:1. the interaction of labour supply and demand.2. the reservation wage.3. relative bargaining power of workers and employers.4. a combination of 1 and 2 above.5. a combination of 2 and 3 above.QUESTION 36If individual goods markets are not perfectly competitive, it can be assumed that the markup will be:1. positive.2. negative.3. zero.4. any one of the above depending on the Q ratios of firms in individual goods markets.QUESTION 37If the expected price level increases:1. there will be a one-for-one increase in output.2. there will be a one-for-one increase in the price level.3. the aggregate demand curve will shift down.4. the aggregate demand curve will become steeper.5. more than one, but not all, of the above will occur.QUESTION 38A change in the nominal stock of money will be associated with a change in output in:1. the short run only.2. the long run only.3. both the short and long run.QUESTION 39Olivier Blanchard has estimated that the relationship between changes in the inflation rate (πt –πt-1) and the rate of unemployment (u t) in the USA as (πt –πt-1) = 7.5 –1.15u t. If the rate of unemployment in the USA falls from 7.5 to 5.5 percent, the rate of inflation can be expected to:1. increase by2.3 percentage points.2. decrease by 2.3 percentage points.3. remain constant.4. increase by5.2 percent.5. decrease by 5.2 percentage points.Note: (πt –πt-1) = 7.5 – 1.15u t = – 1.15(u t–7.5/1.15)QUESTION 40Uncertainty of knowledge in macroeconomics should cause policy makers to use:1. more active policies than they otherwise would.2. less active policies than they otherwise would.3. monetary policy in preference to fiscal policy.4. fiscal policy in preference to monetary policy.PART BQUESTION 41Define both of the following terms:(a) Eurosclerosis: p637 of text book.( “欧洲硬化症”: 用来描述欧洲经济萎靡不振，欧洲经济为高失业率和低增长率所困扰。