Examen IBE Macro 2012

7/29/2019 Examen IBE Macro 2012

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Universitat Pompeu Fabra - IBEIntroduction to Macroeconomics - Academic year 2011-2012

Professor: Teresa Garcia-Mil

MIDTERM EXAMFebruary 16 2012

TYPE 1 EXAM

The exam has 18 questions. You get 1 point for each correct answer, andget subtracted 0.25 points for each incorrect answer.

1) Which of the following would NOT be included in Spanish GDP?

a) The commission charged by the real state agencies when they sell a house

b) The final goods produced in Spain by citizens of other countries

c) Non paid work of cleaning and cooking at home

d) All of the above

2) The implicit GDP deflator is obtained by:

a) Dividing nominal GDP by real GDP

b) Dividing real GDP by nominal GDPc) Constructing a consumption basket of a representative urban consumer and

monitoring the price change of this basket.

d) None of the above

3) Indicate which of the following statements is true

a) The labor participation rate in Spain has decreased over time, and the decrease has

been larger for male than for female workers

b) The labor participation rate in Spain has decreased over time, and the decrease has

been larger for female than for male workers

c) The labor participation rate in Spain has increased over time, and the increase has

been larger for male than for female workers

d) The labor participation rate in Spain has increased over time, and the increase has

been larger for female than for male workers

4) Consider a country that imports all the oil it consumes. What would you expect to

be the effect of a reduction in the oil price on the GDP deflator and on the Consumer

Price Index (CPI)?

a) It decreases both the GDP deflator and the CPI

b) It decreases the GDP deflator but not the CPI

c) It decreases the CPI but not the GDP deflator


5) Berta earns more than what she consumes. Which of the following actions would

be considered an investment by an economist?

a) Buy bonds of the firm Apple

b) Buy new Apple computers for her firm

c) Buy stocks of the firm Apple

d) All the above


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For questions 6, 7, 8 and 9 consider the following economy:

C=3 + 0.2 (Y-T)

I=3+0.2Y-30i

T=5

G=5+0.1Y

MS/P=5(M/P)D=Y-40i

Notice that this is slightly different than the economy we have analyzed in class since

government expenditures depends on income

.

6) Compute the multiplier of the autonomous spending. The right answer is:

a) 1.25

b) 2

c) 1

d) 1.66

7) The fact that government expenditures depend on income has the followingconsequence:

a) It amplifies the effect of an increase in the autonomous spending on income

b) It reduces the effect of an increase in the autonomous spending on income

c) It does not affect the multiplier of the autonomous spending


8) What are the equations for the IS curve and the LM curve in this economy?

a) IS: Y=22 -60i; LM: Y=5+40i

b) IS: Y=20 -60i ; LM: Y=5+40i

c) IS: Y=12+60i ; LM: Y=5 -40i

d) IS: Y=15.7-60i ; LM: Y=5+40i

9) Calculate the interest rate and the income in equilibrium:

a) i=0.17; Y=10.2

b) i=0.7; Y=54

c) i=0.15; Y=11


10) Consider an economy that produces only two goods, apples and bananas. The

prices and quantities produced in years 2010 and 2011 are stated in the following

table:Apples

(prices)

Apples

(quantities)

Bananas

(prices)

Bananas

(quantities)

2010 1 5 2 10

2011 1 7 4 9

The growth rate of real GDP (at constant prices) between 2010 and 2011, taking 2010as the base year is:


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a) 72%

b) 0%

c) - 4.5%


11) The central bank of a country wants to decrease the money supply by changingboth the monetary base and the required reserve ratio of the commercial banks.

a) It can buy bonds through and open market operation and at the same time increase

the required reserve ratio of the commercial banks

b) It can buy bonds through and open market operation and at the same time decrease


c) It can sell bonds through and open market operation and at the same time increase


d) It can sell bonds through and open market operation and at the same time decrease


12) If the LM curve is relatively flat, an expansionary fiscal policy that increases Gwill have the following impact in the economy

a) A large increase in Y and a small increase in i

b) A large increase in Y and a large increase in i

c) A small increase in Y and a large decrease in i

d) A small decrease in Y and no change in i

13) Consider the following information of the trade balance of a country

Balance of Payments in millions of Euros

Exports of goods and services 300

Imports of goods and services 450

Investment income received 50

Investment income paid 20

Net transfers received 10

Increase in foreign holdings of domestic assets 360

Increase in domestic holdings of foreign assets 250

Statistical discrepancy 0Choose which of the following statements is true

a) The current account is 150 and the capital account is -150

b) The current account is -150 and the capital account is 150c) The current account is -110 and the capital account is 110

d) The current account is 110 and the capital account is -110

14) Imagine a country that is in a big recession. The government decides to increase

the public pension payments, and invest in new highways. The Central Bank,

independent of the government, wants to reduce the interest rate in the economy. The

combination of the actions of the government and the central bank is a policy mix of

the following kind

a) Fiscal expansion and monetary expansion

b) Fiscal expansion and monetary contraction

c) Fiscal contraction and monetary expansion

d) Fiscal contraction and monetary contraction

15) With the policy implemented in question 14, choose the correct statement


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a) Government expenditures increase, Taxes net of transfers do not change,

Consumption increases, and Investment stays constant.

b) Government expenditures decrease, Taxes net of transfers increase, Consumption

decreases, and Investment stays constant.

c) Government expenditures increase, Taxes net of transfers decrease, Consumption

increases, and Investment increases.d) Government expenditures increase, Taxes net of transfers decrease, Consumption

increases, and Investment decreases

16) The director of the commercial bank where you work tells you that the bank has 5

million Euros of reserves above the minimum reserves required by the Central Bank.

If the total deposits in the commercial bank are 300, and the credit to clients is 255,

what is the reserve requirement that the central bank has established in the country?

a) 50/300

b) 50/255

c) 40/300

d) 40/255

17) If the marginal propensity to consume decreases

a) The multiplier increases, and fiscal policy is more effective

b) The multiplier decreases, and monetary policy is more effective

c) The multiplier decreases, and fiscal policy is less effective

d) The multiplier increases, and monetary policy is less effective

18) The interest rate of Spanish government bonds is 5%. The interest rate of US

Government bonds is 3%. The exchange rate of the Euro respect to the Dollar is

E=1.5. If the uncovered interest parity condition holds

a) The Euro is expected to appreciate 2%

b) The Euro is expected to depreciate 2%

c) The interest rate of the US bonds is expected to increase up to 5%

d) The interest rate of the Spanish bonds is expected to decrease to 3%

Examen IBE Macro 2012

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