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
d) None of the above
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
d) None of the above
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
d) None of the above
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%
d) None of the above
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
the required reserve ratio of the commercial banks
c) It can sell bonds through and open market operation and at the same time increase
the required reserve ratio of the commercial banks
d) It can sell bonds through and open market operation and at the same time decrease
the required reserve ratio of the commercial banks
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%
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