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THE INTERNATIONAL UNIVERSITY (IU) – VIETNAM NATIONAL UNIVERSITY – HCMC MIDTERM EXAMINATION Date: …/…/ 2022 Duration: 60 minutes
Student ID: ..................................
Name:................................................
SUBJECT: MACROECONOMICS Lecturers: Signature: Signature: Dr. Hà Minh Trí Dr. Nguyen Ba Trung Ms. Bui Thi Thao Hien
INSTRUCTIONS FOR MIDTERM EXAM
School of Business
1 This is a closed-book examination. 2. No talking during the exam
3. No cell phone, laptop and PDAs are used during the exam 4. No dictionary.
5. This exam includes three parts with 04 pages. GOOD LUCK!
DO NOT WRITE IN THE AREA BELOW:
Question I: .…………………. / 40 points
Question II:.………………….. / 20 points 1 2
Question III:………………… / 40 points
Question 1 (40 points): Part A (20 points)
Consider an economy with two goods, cheese and salad. Suppose that the prices and quantities
sold in 2012 and 2013 are the following:
a. Calculate the nominal GDP for 2012 and for 2013. Explain how you got your numbers. (4 points)
b. Calculate the real GDP for 2013 using 2012 as a base year (4 points)
c. Calculate the real GDP growth rate for 2012 to 2013 (4 points)
d. Calculate the cost of the CPI basket if the market basket includes 2 cheese and 1 salad in 2012 (4 points)
e. Assume that the base year is 2012 and the market basket includes 2 cheese and 1 salad. Calculate the CPI for 2013 (4 points) ACBSP: Analytic
Topic: Measuring a nation’s income / Measuring Cost of Living Bloom’s Taxonomy: K
Relevant Program Learning Outcomes: PLO2
Relevant Course Learning Outcomes: CLO3
Level of difficulty: 3 Hard Part B (20 points)
Calculate the unemployment rate and the labor force participation rate in the following cases:
a. Country A- Employed: 108 million. Adult population: 200 million. In labor force: 120 million. (4 points) 2 3
b. Country B-In labor force: 150 million. Adult population: 200 million. Unemployed: 7.5 million. (4 points)
c. Country C- In labor force: 30 million. Adult population: 120 million. Unemployed: 6 million. (4 points) d.
Which of the three countries above (A, B, and C) are experiencing frictional and structural
unemployment? Explain your answer. (4 points) e.
Which of the three countries above (A, B, and C) is likely to have the highest GDP? Which
is likely to have the lowest GDP. Explain your answers. (4 points) ACBSP: Analytic Topic: Unemployment Bloom’s Taxonomy: K
Relevant Program Learning Outcomes: PLO2
Relevant Course Learning Outcomes: CLO3
Level of difficulty: 2 Moderate
Question 2 (20 points) :
Consider the following events in a closed economy and its potential impacts on supply curve,
demand curve, and the equilibrium in the market for loanable funds. Please complete the following table: 3 4
Topic: Saving, Investment and Financial Systems Bloom’s Taxonomy: K
Relevant Program Learning Outcomes: PLO2
Relevant Course Learning Outcomes: CLO3
Level of difficulty: 1 Easy
Question 3 (40 points) Part A ( 20 points)
Use the balance sheet for the following questions.
Bank A holds $250 million in deposits and maintains a reserve ratio of 10 percent.
a. Show a T-account for Bank A. (5 points) 4 5
b. Now suppose that Bank A's largest depositor withdraws $10 million in cash from her account.
If Bank A decides to restore its reserve ratio by reducing the amount of loans outstanding,
show its new T-account. (5 points)
c. Explain what effect Bank A's action will have on other banks. (5 points)
d. Why might it be difficult for Bank A to take the action described in part (b)? Discuss another
way for Bank A to return to its original reserve ratio. (5 points) ACBSP: Analytic Topic: Monetary System Bloom’s Taxonomy: K
Relevant Program Learning Outcomes: PLO2
Relevant Course Learning Outcomes: CLO3
Level of difficulty: 3 Hard PART B ( 20 points)
Suppose that the reserve requirement for checking deposits is 10 percent and that banks do not hold any excess reserves. a.
If the Fed sells $$1 million of government bonds, what is the effect on the economy's
reserves and money supply? (10 points) b.
Now suppose the Fed lowers the reserve requirement to 5 percent, but banks choose to
hold another 5 percent of deposits as excess reserves. Why might banks do so? What is the
overall change in the money multiplier and the money supply as a result of these actions? (10 points) ACBSP: Analytic Topic: Monetary System Bloom’s Taxonomy: K
Relevant Program Learning Outcomes: PLO2
Relevant Course Learning Outcomes: CLO3
Level of difficulty: 3 Hard
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