Short answer guide for AD-AS & monetary policy môn Vĩ mô | Trường Đại học Duy Tân

SHORT ANSWERS MACROECONOMICS
CHAPTER 5: AD-AS MODEL & FISCAL POLICY
1. How is net export of an economy measured?
=> Net Exports = Export – import
2. How is Aggregate Demand (AD) of an economy measured? => AD = C + I + G + Xn C: Consumption I: Investment G: government purchase Xn: Net Exports
3. What will happen if consumption and disposable income are equal at a particular level of income? =>
4. Suppose the Disposable Income of an economy is $450 billion and saving is $120 billion.
What is the consumption in that economy?
=> C = DI – S = 450 – 120 = 330 ( billion)
5. If you save more $80 when you experience a $400 rise in your disposable income. What
is your marginal propensity to consume (MPC)? =>
6. If consumption is $10,000 when income is $10,000, and consumption increases to
$11,000 when income increases to $12,000. What is the MPS? => MPC = = => MPS = 1 – MPC = 0.5
7. If MPC equals 0.75. What is the Multiplier? 1 1 => Multiplier = 1−MPC =0.75=4
8. What are the tools of Fiscal policy?
=> Government spending and taxes
9. What will happen if the aggregate demand (AD) of the economy increases? => Demand-Pull Inflation
10. How fiscal policy is used if the economy is experiencing a sharp rise in the inflation rate?
=> Decrease government spending, increase taxes
CHAPTER 6: MS-MD MODEL & MONETARY POLICY
1. What are 2 components of the m1 supply of money?
=> Checkable deposit, currency
2. What are the three basic functions of money?
=> Medium of change , unit of account , store of value
3. What is the monetary multiplier? How does it work 1 1 - M =
Required Reserveratio=R
- Required reserve ratio increase => monetary multiplier decrease => ms decrease
- Required reserve ratio decrease => monetary multiplier increase => ms increase
4. What is the basic goal of monetary policy?
=> Help the economy achieve price stability, full employment, and economic growth
5. What are the three main tools of monetary policy?
=> The Reserve Ratio , The Discount Rate , Open Market Operations
6. Which of the monetary policy tools available to the central bank is most effective? => Open market operations
7. What happens to interest rate at equilibrium when nominal income (gdpn) rises? => Interest rate decrease
8. What happens to interest rate at equilibrium when the central bank uses the
restrictive monetary policy? => Interest rate increase
9. What happens to interest rate at equilibrium when the central bank uses the
contractionary monetary policy? => Interest rate decrease
10. What is the basic determinant of the transactions demand and the asset demand for money? =>
11. How is the equilibrium interest rate in the money market determined?=> MS = MD
12. Why does the federal reserve require commercial banks to have reserves?
=> Control lending abilities of commercial banks
CHAPTER 7: INTERNATIONAL TRADE
1. Country A limits other nation's exports to Country A to 1,000 tons of coal annually.
Thisis an example of which trade barriers? => Import quota
2. What happens when imports are greater than exports? => Trade deficit
3. What happens to a nation’s imports or exports of steel when the world price of the steel
rises above the domestic price? => Exports of the product increase
4. What happens to a nation’s imports or exports of rice when the world price of the rice
falls below the domestic price? => Exports of the product decrease
5. What should we call when a country has ability to produce a good at a lower cost, in
terms of labor, than another country? => Comparative advantage
6. What are the excise taxes on imported goods to obtain revenue or to protect domestic firms? =>Tariffs
7. What advantage should a nation have to specialize in and export the goods to other countries? => Comparative advantage
8. Using all its resources, country A can produce 30 cars or 6 trucks, and country B can
produce 35 cars or 21 trucks. In this case, which country has the absolute advantage
inproducing both products? =>
9. Using all its resources, country A can produce 30 cars or 6 trucks, and country B can
produce 35 cars or 21 trucks. In this case, which country has a comparative
advantagein trucks? => Country B
10. Using all its resources, country A can produce 30 cars or 6 trucks, and country B
can produce 35 cars or 21 trucks. In this case, which country has a comparative
advantage in cars? => Country A
CHAPTER 8: EXCHANGE RATE
Indicate whether each of the following creates a demand for or a supply of European
euros in foreign exchange markets (Question 1-7)
1. A U.S. airline firm purchases several Airbus planes assembled in France. => Demand for euro
2. A German automobile firm decides to build an assembly plant in South Carolina. => Supply
3. A U.S. college student decides to spend a year studying at the Sorbonne in Paris. => Demand
4. An Italian manufacturer ships machinery from one Italian port to another on a Liberian freighter. => Supply
5. The U.S. economy grows faster than the French economy. => Demand
6. A U.S. government bond held by a Spanish citizen matures, and the loan amount is
paid back to that person. => Demand
7. It is widely believed that the euro will depreciate in the near future => Supply
Alpha’s balance-of-payments data for 2006 are shown below. All figures are in billions of
dollars (Question 8-10) Goods exports $40 Goods imports 30 Service exports 15 Service imports 10 Net investment income 5 Net transfers 10
8. What are the ( a ) balance on goods? 10
9. What are the ( b ) balance on goods and services? 5
10. What are the ( c ) balance on current account? 30 ESSAY MACROECONOMICS
a. The government reduces personal income taxes.
b. Interest rates rise.
c. There is an economic boom overseas that raises the incomes of foreign households
d. New networking technology increases productivity all over the economy.
e. The price of oil rises substantially.
f. Business taxes fall.
g. The government passes a law doubling all manufacturing wages
h. A widespread fear by consumers of an impending economic depression.
i. A major increase in spending for health care by the federal government.
j. The complete disintegration of OPEC, causing oil prices to fall by one-half.
k. A sizable increase in labor productivity (with no change in nominal wages).
MULTICHOICE QUESTIONS DI, C, S, MPC, MPS 1. Saving equals
A. Investment plus consumption
B. Investment minus consumption
C. Disposable income minus consumption
D. Disposable income plus consumption
2. As disposable income decrease, ceteris paribus,
A. Both consumption and saving increase
B. Consumption increase and saving decrease
C. Consumption decrease and saving increase
D. Both consumption and saving decrease
4. If consumption spending increases from $358 to $367 billion when disposable income
increases from $412 to $427 billion, it can be concluded that the marginal propensity to consume is A. 0.4 B. 0.6 C. 0.8 D. 0.9
5. If disposable income is $375 billion when the average propensity to consume is 0.8, it can be concluded that
A. The marginal propensity to consume is also 0.8
B. The marginal propensity to save is 0.2
C. Consumption is $325 billion D. Saving is $75 billion
6. As the disposable income of the economy increases A. Both the apc and aps rise
B. The apc rises and aps falls
C. The apc falls and aps rises D. Both the apc and aps fall
7. The slope of the consumption schedule or line for a given economy is the
A. Marginal propensity to consume
B. Average propensity to consume
C. Marginal propensity to save D. Average propensity to save
Answer questions 10,11 and 12 on the basis of the following disposable income (di) and consumption
(c) schedule for a private, closed economy. All figures are in billions of dollars. Di c $0 $4 40 40 80 76 120 112 160 148 200 184
10. If plotted on graph, the slope of the consumption schedule would be A. 0.6 B. 0.7 C. 0.8 D. 0.9
11. At the $160 billion level of disposable income, the average propensity to save is A. 0.015 B. 0.075 C. 0.335 D. 0.925
12. If consumption increases by $5 billion at each level of disposable income, then the marginal Propensity to consume will
A. Change, but the average propensity to consume will not change
B. Change, but the average propensity to consume will change
C. Not change, but the average propensity to consume will change
D. Not change, but the average propensity to consume will not change
13. If the slope of a linear saving schedule decreases, then it can be concluded that the A. Mps has decreased B. Mpc has decreased C. Income has decreased D. Income has increased
14. An increase in wealth shifts the consumption schedule: giàu thì tăng chi tiêu và giảm tiết kiệm
A. Downward and the saving schedule upward
B. Upward and the saving schedule downward
C. Downward and the saving schedule downward
D. Upward and the saving schedule upward
15. Expectations of the a recession are likely to lead households to
A. Increase consumption and saving
B. Decrease consumption and saving.
C. Decrease consumption and increase saving
D. Increase consumption and decrease saving
16. Higher real interest rate are likely to
A. Increase consumption and saving
B. Decrease consumption and saving
C. Decrease consumption and increase saving
D. Increase consumption and decrease saving
18. Which relationship is an inverse one?
A. Consumption and disposable income
B. Investment spending and the rate of interest
C. Saving and disposable income
D. Investment spending and gdp
19. A decrease in investment demand would be a consequence of decline in A. The rate of interest B. The level of wages paid C. Business taxes D. Expected future sales
20. Which would increase investment demand?
A. An increase in business taxes
B. An increase in planned inventories
C. A decrease in the rate of technological change
D. An increase in the cost of acquiring capitals goods
22. If there was a change in investment spending of 10 and the marginal propensity to save was .25, the Real gdp would increase by A. $10 B. $20 C. $25 D. $40
23. If the value of the marginal propensity to consume is 0.6 and real gdp falls by $25, this was caused
By a decrease in initial spending of A. $10 B. $15 C. $16.67 D. 20
24. If the marginal propensity to consume is 0.67 and initial spending increases by $25, real gdp will A. Increase by $75 B, decrease by $75 C. Increase by $25 D. Decrease by $25
25. If in an economy a $150 billion increase in investment spending creates $150 billion of new income
In the first round of the multiplier process and $105 billion in the second round, the multiplier and the
Marginal propensity to consume will be, respectively,2
Chu kì 1 thu nhập 150 và chu kì sau thu nhập được 105 tức là tiêu thụ được 105 và tiết kiệm 45 từ đó
Tính ra đc mpc và mps. Sau đó áp dụng công thức tính hệ số nhân. A. 5.00 and 0.80 B. 4.00 and 0.75 C. 3.33 and 0.7 D. 2.5 and 0.4