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CB2402: Macro-Economics
Session
Semester A 2015/16
Time allowed
90 minutes
1. This paper has 40 multiple choice questions (2.5 points each, total 100 points)
2. Please write your name and student ID on the multiple choice answer sheet AND exam paper
3. Please answer all questions on the multiple choice answer sheet provided
4.
5. Please return the multiple choice answer sheet AND exam paper at the end of the exam
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5. Which of the following is not one of the three sources of technological change?
A) increases in human capital
B) better machinery and equipment
C) additional amounts of existing capital
D) better means of organizing and managing production
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Quantity
Price
Smartphones
35
$2,000
Movie tickets
80
150
Textbooks
10,000
132
Suppose that a simple economy produces only three goods and services: smartphones, movie
tickets and textbooks. Using the information in the above table, nominal GDP for this
simple economy equals to
A) 10,115 units
B) $1,332,000
C) $1,402,000
D) $2,282
14. The purchase of a new cell phone is included in
A) consumption expenditures.
B) investment expenditures.
C) government purchases.
D) net exports.
15. Real GDP stands for:
A) The value of final goods and services evaluated at current-year prices
B) A measure of the price level, calculated by dividing nominal GDP by real GDP and
multiplying by 100
C) The value of final goods and services evaluated at base-year prices
D) A measure of the average value of goods and services in the economy
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16. A very simple economy produces three goods: smartphones, laptops, and chairs. The
quantities produced and their corresponding prices for 2011 and 2015 are shown in the
table below.
2011
2015
Product
Quantity
Price
Quantity
Price
Smartphones
100
$1,500
110
$1,200
Laptops
75
4,500
80
5,200
Chairs
2000
225
2100
245
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25. Using the table below, what is the growth rate of real GDP in 2013?
Year
2011
$15,700
2012
15,875
2013
15,875
2014
17,462
A) 1.00%
B) 0.007%
C) 10.00%
D) 0.00%
26. The property/function of financial system that allows savers to quickly convert their
investments into cash is called
A) Risk-sharing
B) Liquidity
C) Information transfer
D) Intermediation
27. When public savings is equal to zero, then government runs:
A) Budget surplus
B) Budget deficit
C) Balanced budget
D) None of the above
28. The market for loanable funds determines the market interest rate and the quantity of
loanable funds exchanged. The crowding out effect in loanable funds market happens
A) when the government runs budget deficit
B) when net exports are positive
C) when disposable income of households increases
D) when interest rates decrease
29. The increase in the desire of households to consume today would shift supply of the
loanable funds to the ________, causing real interest rate to ________ and investment
to ________.
A) right; increase; decrease;
B) left; increase; decrease;
C) left; decrease; decrease;
D) left; increase; increase;
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30. If real GDP in the United States standing at $US 16 trillion in 2015, is growing at an annual
rate of 3.5% each year and China's real GDP, standing at $US 10 trillion in 2015, is growing
at a rate of 7%, which of the following would we expect in the long run?
A) Real GDP of China would be approximately $US 20 trillion in 2025
B) Real GDP of the United States would be approximately $US 22.57 trillion in 2025
C) Real GDP of China would be higher than real GDP of the US in 2030
D) All of the above
31. If planned aggregate expenditure is below potential GDP and planned aggregate
expenditure equals GDP, then
A) the economy is in a recession.
B) the economy is at full employment.
C) actual inventory investment will be less than planned inventory investment.
D) actual inventory investment will be greater than planned inventory investment.
32. If an increase in autonomous investment spending of $10 million results in a $40 million
increase in equilibrium real GDP, then the marginal propensity to consume is
A) 0.5.
B) 0.75.
C) 0.8.
D) 0.9.
33. An increase in the price level results in a(n) ________ in the quantity of real GDP
demanded because ________.
A) decrease; a higher price level increases consumption, investment, and net exports.
B) decrease; a higher price level reduces consumption, investment, and net exports.
C) increase; a higher price level increases consumption, investment, and net exports.
D) increase; a higher price level reduces consumption, investment, and net exports.
34. German luxury car exports were hurt in 2009 as a result of the recession. How would
this decrease in exports have affected Germany's aggregate demand curve?
A) The aggregate demand curve would have shifted to the left.
B) The aggregate demand curve would have shifted to the right.
C) The aggregate demand curve would not have shifted, but there would have been a
movement down the aggregate demand curve.
D) The aggregate demand curve would not have shifted, but there would have been a
movement up the aggregate demand curve.
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35. Suppose a developing country receives more machinery and capital equipment as foreign
entrepreneurs increase the amount of investment in the economy. As a result,
A) the long-run aggregate supply curve will shift to the right but the short-run aggregate
supply curve will not change.
B) the short-run aggregate supply curve will shift to the right but the long-run aggregate
supply curve will not change.
C) the long-run aggregate supply curve and the short-run aggregate supply curve will shift to
the right.
D) the economy will move up along the long-run aggregate supply curve and the short-run
aggregate supply curve.
36. After an unexpected ________ in the price of oil, the long-run adjustment decreases the
price level and ________ the unemployment rate as they return to their original levels.
A) increase; increases
B) increase; decreases
C) decrease; increases
D) decrease; decreases
Figure 1:
In the figure above, AD1, LRAS1 and SRAS1 denote the curves of Aggregate Demand, LongRun Aggregate Supply and Short-Run Aggregate Supply respectively in year 1, while AD2,
LRAS2 and SRAS2 denote the curves of Aggregate Demand, Long-Run Aggregate Supply and
Short-Run Aggregate Supply respectively in year 2. The economy is at point A in year 1. Please
refer to Figure 1 to answer questions 37-40 on the next page.
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37. Given the economy at point A in year 1, what is the actual growth rate in GDP in year 2?
A) 2.5%
B) 7.3%
C) 8.0%
D) 10.0%
38. Given the economy at point A in year 1, what is the growth rate in potential GDP in year
2?
A) 2.5%
B) 7.3%
C) 8.0%
D) 10.0%
39. Given the economy at point A in year 1, what will happen to the unemployment rate in
year 2?
A) It will fall.
B) It will rise.
C) It will remain constant.
D) Not enough information to answer the question
40. Given the economy at point A in year 1, what is the inflation rate in year 2?
A) 0.2%
B) 0.9%
C) 1.8%
D) 2.0%
-END-
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37. B
38. D
39. B
40. C
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