Macroeconomics exercises

Measuring a Nation’s Income; CPI; DGDP
1.
Macroeconomists study
a. decisions of households and firms.
b. economy-wide phenomena.
c. the interaction of households and firms.
d. regulations of firms and unions.
2.
Robert works as a lawyer.
a. GDP computations should be made using his income from providing legal services, not his
production of legal services.
b. GDP computations should be made using his production, not his income from providing legal
services.
c. GDP computations should include both his income and his production.
d. GDP computations should include either his income or his production, but not both.
3.
If GDP rises,
a. income and production must both rise.
b. income and production must both fall.
c. income must rise, but production may rise or fall.
d. production must rise, but income may rise or fall.
4.
In a simple circular-flow diagram total income and total expenditure are
a. seldom equal because of the dynamic changes which occur in an economy.
b. equal only when all goods and services produced are sold.
c. always equal because every transaction has a buyer and a seller.
d. always equal because of accounting rules.
ANSWER: c.
always equal because every transaction has a buyer and a seller.
5.
In an economy consisting of only households and firms, GDP can be computed by

a. adding up the total expenditures of households.
b. adding up the total income paid by firms.
c. Either a or b are correct.
d. None of the above are correct.
ANSWER: c.
Either a or b are correct.
6.
Which of the following is not included in GDP?
a. unpaid cleaning and maintenance of houses
b. services such as those provided by lawyers and hair stylists
c. the estimated rental value of owner-occupied housing
d. production of foreign citizens living in the United States
ANSWER: a.
unpaid cleaning and maintenance of houses
7.
Over time people have come to rely more on market-produced goods and less on goods that they
produce for themselves. For example people eat at restaurants relatively more and prepare their own
meals at home relatively less. By itself this change would
a. make GDP fall over time.
b. not make any change in GDP over time.
c. make GDP rise over time.
d. change GDP, but in an uncertain direction.
ANSWER: c.
make GDP rise over time.
8.
If a state made an illegal activity such as gambling or prostitution legal, then other things the same GDP
a. necessarily increases.
b. necessarily decreases.

9.

10.

11.

12.

13.

14.

15.

c. doesn’t change because both legal and illegal production are included in GDP.
d. doesn’t change because these activities are never included in GDP.
Suppose GDP consists of wheat and rice. In 2002, 20 bushels of wheat are sold at $4 per bushel, and 10
bushels of rice are sold at $2 per bushel. If the price of wheat was $2 per bushel and the price of rice
was $1 per bushel in 2001, the base year, nominal 2002 GDP is
a. $100, real 2002 GDP is $50, and the GDP deflator is 50.
b. $50, real 2002 GDP is $100, and the GDP deflator is 200.
c. $100, real 2002 GDP is $50, and the GDP deflator is 200.
d. $40, real 2002 GDP is $100, and the GDP deflator is 50.
Suppose that the country of Samiam produces only eggs and ham. In 2002 it produced 100 units of
eggs at $3 each and 50 units of ham at $4 each. In 2001, the base year, eggs sold for $1.50 per unit and
ham for $5.
a. Nominal 2002 GDP is $500, real 2002 GDP is $400, and the GDP deflator is 80.
b. Nominal 2002 GDP is $500, real 2002 GDP is $400 and the GDP deflator is 125.
c. Nominal 2002 GDP is $400, real 2002 GDP is $400, and the GDP deflator is 100.
d. Nominal 2002 GDP is $400, real 2002 GDP is $500, and the GDP deflator is 125.

In the country of Mainia, GDP consists of cranberries and maple syrup. In 2002, 50 units of cranberries
are sold at $20 per unit, and 100 units of maple syrup are sold at $10 per unit. If the price of
cranberries was $10 per unit and the price of maple syrup was $15.00 per unit in 2001, the base year,
then nominal 2002 GDP is
a. $2,000, real 2002 GDP is $2,000, and the GDP deflator is 100.
b. $2,000, real 2002 GDP is $2,500, and the GDP deflator is 125.
c. $2,500, real 2002 GDP is $2,000, and the GDP deflator is 83.3.
d. None of the above are correct.
The GDP deflator is the ratio of
a. real GDP to nominal GDP.
b. real GDP to nominal GDP multiplied by 100.
c. nominal GDP to real GDP.
d. nominal GDP to real GDP multiplied by 100.
If a small country has current nominal GDP of $20 billion and a GDP deflator of 50, what is its real GDP?
a. $100 billion
b. $40 billion
c. $10 billion
d. $4 billion
If a country reported nominal GDP of 100 billion in 2002 and 75 billion in 2001 and reported a GDP
deflator of 125 in 2002 and a deflator of 120 in 2001 then from 2001 to 2002 real output
a. and prices both rose.
b. rose and prices fell.
c. fell and prices rose.
d. and prices both fell.
The information below was reported by the World Bank. On the basis of this information, which list
below contains the correct ordering of GDP per person from highest to lowest?
Country
Nominal GDP 2000
Population 200
Japan

$4,800,000 million
127 million
Switzerland
$240,000 million
7.2 million
United States
$9,800,000 million
280 million


a.
b.
c.
d.

Japan, Switzerland, United States
Japan, United States, Switzerland
United States, Switzerland, Japan
United States, Japan, Switzerland

Saving, Investment, and the Financial System
1.
A bond is a
a. financial intermediary.
b. certificate of indebtedness.
c. certificate of partial ownership in an enterprise.
d. None of the above are correct.
2.
A certificate of indebtedness that specifies the obligations of the borrower to the holder is called a
a. bond.

b. stock.
c. mutual fund.
d. All of the above are correct.
3.
If the government’s expenditures exceeded its receipts, it would likely
a. lend money to a bank or other financial intermediary.
b. borrow money from a bank or other financial intermediary.
c. directly buy bonds from the public.
d. directly sell bonds to the public.
4.
People who buy newly issued stock in a corporation such as Rockwood Pottery provide
a. debt finance and so become part owners of Rockwood.
b. debt finance and so become creditors of Rockwood.
c. equity finance and so become part owners of Rockwood.
d. equity finance and so become creditors of Rockwood.
5.
Compared to bonds, stocks offer the holder
a. lower risk.
b. partial ownership.
c. the likelihood of a lower return.
d. All of the above are correct.
6.
All else equal, when people become more optimistic about a company's future, the
a. supply of the stock and the price will both rise.
b. supply of the stock and the price will both fall.
c. demand for the stock and the price will both rise.
d. demand for the stock and the price will both fall.
7.
Other things being constant, when a business issues more stock, the
a. supply of the stock is greater and thus the price will fall.

b. supply of the stock is less and thus the price will rise.
c. demand for the stock is greater and thus the price will rise.
d. demand for the stock is less and thus the price will fall.
8.
Susan puts $125 into an account and one year later has $135; what was the interest rate?
a. 5 percent
b. 7 percent
c. 8 percent
d. 10 percent


9.

10.

11.

Fred puts $150 into an account when the interest rate is 4 percent. Later he checks his balance and
finds he has about $168.73. How long did Fred wait to check his balance?
a. 3 years
b. 3.5 years
c. 4 years
d. 4.5 years
Brad puts $200 into an account when the interest rate is 8 percent. Later he checks his balance and
finds that he has a balance of about $272.10. How many years did he wait to check his balance?
a. 3 years
b. 3.5 years
c. 4 years
d. 4.5 years
Jackie puts $400 into an account when the interest rate is 10 percent. Later she checks her balance and

finds it’s worth about $708.62. How many years did she wait to check her balance?
a. 5 years
b. 6 years
c. 7 years
d. 8 years

Labor, unemployment
1.

Who would not be included in the labor force?
a. Jay, who is on temporary layoff
b. Mike, who has retired and is not looking for work
c. Jane, who does not have a job, but has applied for several in the last week
d. None of the above are included in the labor force.

2.

Who would be included in the labor force?
a. Holly, an unpaid homemaker
b. Tiffany, a full-time student not looking for work
c. Cody, who does not have a job, but is looking for work
d. None of the above are included in the labor force.

3.

Who would be included in the labor force?
a. Karen, who works most of the week in a steel factory
b. Beth, who is waiting for her new job at the bank to start
c. Dave, who does not have a job, but is looking for work
d. All of the above are included in the labor force.

4.

Who would be included in the labor force?
a. Derrick, who is waiting for his new job to start
b. Brett, who has become discouraged looking for a job and has quit looking for awhile
c. Homer, an unpaid homemaker
d. None of the above would be included in the labor force.

5.

In 2000 in Japan, based on concepts similar to those used to compute U.S. employment statistics, the
unemployment rate was about 4.8 percent, the labor force participation rate was about 62 percent,
and the adult population was about 108 million. How many people were employed and how many
were unemployed?
a. about 63.8 million and 3.2 million.
b. about 63.8 million and 5.2 million.
c. about 67 million and 3.2 million.
d. about 67 million and 5.2 million.


6.

In 2000 in the United Kingdom, the adult population was about 46.5 million, the labor force
participation rate was 63.5 percent, and the unemployment rate was 5.8 percent. What was the
number of people employed and the number of people unemployed?
a. about 29.5 million and 2.7 million.
b. about 29.5 million and 1.7 million.
c. about 27.8 million and 2.7 million.
d. about 27.8 million and 1.7 million.

Monetary policy
1.

When the Federal Reserve conducts open market transactions, it
a.
issues Federal Reserve notes.
b.
buys or sells government bonds from the public.
c.
lowers the discount rate.
d.
increases its lending to member banks.

2.

When the Fed conducts open market purchases,
a.
it buys Treasury securities, which increases the money supply.
b.
it buys Treasury securities, which decreases the money supply.
c.
it borrows from member banks, which increases the money supply.
d.
it lends money to member banks, which decreases the money supply.

3.

When the Fed conducts open market sales,
a.

it sells Treasury securities, which increases the money supply.
b.
it sells Treasury securities, which decreases the money supply.
c.
it borrows from member banks, which increases the money supply.
d.
it lends money to member banks, which decreases the money supply.

4.

When the Fed conducts open market purchases,
a.
it buys Treasury securities, which increases the money supply.
b.
it buys Treasury securities, which decreases the money supply.
c.
it sells Treasury securities, which increases the money supply.
d.
it sells Treasury securities, which decreases the money supply.

5.

The Fed can increase the money supply by conducting open market
a.
sales and raising the discount rate.
b.
sales and lowering the discount rate.
c.
purchases and raising the discount rate.
d.

purchases and lowering the discount rate.

6.

The Fed can increase the price level by conducting open market
a.
sales and raising the discount rate.
b.
sales and lowering the discount rate.
c.
purchases and raising the discount rate.
d.
purchases and lowering the discount rate.

7.

Suppose that the reserve ratio is 10 percent and that a bank has $2,000 in deposits. Its required
reserves are
a.
$20.
b.
$200.
c.
$1,880.
d.
$1,800.

8.

Suppose a bank has a 10 percent reserve ratio, $5,000 in deposits, and it loans out all it can given the

reserve ratio.
a.
It has $50 in reserves and $4,950 in loans.
b.
It has $500 in reserves and $4,500 in loans.


c.
d.

It has $555 in reserves and $4,445 in loans.
None of the above is correct.

9.

Suppose a bank has a 10 percent reserve ratio, $4,000 in deposits, and it loans out all it can given the
reserve ratio.
a.
It has $40 in reserves and $3,960 in loans.
b.
It has $400 in reserves and $3,600 in loans.
c.
It has $444 in reserves and $3,556 in loans.
d.
None of the above is correct.

10.

Suppose a bank has $10,000 in deposits and $8,000 in loans. It has a reserve ratio of
a.

2 percent.
b.
12.5 percent
c.
20 percent.
d.
80 percent.

11.

Suppose a bank has $200,000 in deposits and $190,000 in loans. It has a reserve ratio of
a. 5 percent
b. 9.5 percent
c.
10 percent
d. None of the above is correct.

12.

If you deposit $100 into a demand deposit at a bank, this action by itself
a.
does not change the money supply.
b.
increases the money supply.
c.
decreases the money supply.
d.
has an indeterminate effect on the money supply.

Open economy

1.

In the open-economy macroeconomic model, the market for loanable funds identity can be written as
a. S = I
b. S = NCO
c. S = I + NCO
d. S + I = NCO

2.

In the open-economy macroeconomic model, the supply of loanable funds comes from
a. national saving.
b. private saving.
c. domestic investment.
d. the sum of domestic investment and net capital outflow.

3.

In the open-economy macroeconomic model, the demand for loanable funds comes from
a. domestic investment.
b. net exports.
c. net capital outflow
d. the sum of net capital outflow and domestic investment.

4.

A fall in the real interest rate encourages investment and so
a. increases the quantity of loanable funds demanded.
b. decreases the quantity of loanable funds demanded.
c. increases the quantity of loanable funds supplied.

d. decreases the quantity of loanable funds supplied.

5.

An increase in real interest rates in the United States
a. discourages both U.S. and foreign residents from buying U.S. assets.
b. encourages both U.S. and foreign residents to buy U.S. assets.


c. encourages U.S. residents to buy U.S. assets, but discourages foreign residents from buying U.S.
assets.
d. encourages foreign residents to buy U.S. assets, but discourages U.S. residents from buying U.S.
assets.
6.

Which of the following would be consistent with an increase in the U.S. real interest rate?
a. a Swiss bank purchases a U.S. bond instead of the German bond they had considered purchasing.
b. firms decide since interest rates are higher to do more investment spending.
c. Brad decides to put less money in his savings account than he had planned to.
d. All of the above are consistent.

7.

An increase in the U.S. real interest rate induces
a. Americans to buy more foreign assets, which increases U.S. net capital outflow.
b. Americans to buy more foreign assets, which reduces U.S. net capital outflow
c. foreigners to buy more U.S. assets, which reduces U.S. net capital outflow.
d. foreigners to buy more U.S. assets, which increases U.S. net capital outflow.

8.

The country of Freedonia has a GDP of $2,000, consumption of $1,200, and government purchases of
$400. This implies that it has
a. investment of $400.
b. investment plus net capital outflow of $400.
c. investment plus net exports of $400.
d. both b and c.

9.

The country of Sylvania has a GDP of $1,000, investment of $200, government purchases of $200, and
net capital outflow of negative $100. This means that
a. consumption equals $700.
b. consumption equals $600.
c. consumption equals $500.
d. saving equals $300.

AD-AS
1.

Which of the following shifts aggregate demand to the right?
a. an increase in the money supply
b. an increase in net exports at every exchange rate
c. an investment tax credit
d. All of the above are correct.

2.

Which of the following shifts aggregate demand to the right?
a. a decrease in the money supply

b. technological progress that increases the profitability of capital goods
c. the repeal of an investment tax credit
d. a decrease in the price level

3.

Which of the following shifts aggregate demand to the left?
a. an increase in the price level
b. a decrease in the money supply
c. an increase in net exports
d. an investment tax credit

4.

Which of the following shifts aggregate demand to the right?
a. Congress reduces purchases of new weapons systems.
b. The Fed buys bonds in the open market.
c. The price level falls.
d. Net exports fall.


5.

Which of the following shifts aggregate demand to the left?
a. The price level rises.
b. The price level falls.
c. The dollar depreciates.
d. Stock prices fall.

6.

When the government spends more, the initial effect is that
a. aggregate demand shifts right.
b. aggregate demand shifts left.
c. aggregate supply shifts right.
d. aggregate supply shifts left.

7.

Aggregate demand shifts left when the government
a. decreases taxes.
b. cuts military expenditures.
c. Both of the above are correct.
d. None of the above is correct.

8.

When production costs rise,
a. the short-run aggregate supply curve shifts to the right.
b. the short-run aggregate supply curve shifts to the left.
c. the aggregate demand curve shifts to the right.
d. the aggregate demand curve shifts to the left.

9.

When production costs rise, in the short run
a. output and prices rise.
b. output rises and prices fall.
c. output falls and prices rise.
d. output and prices fall.

10.

Which of the following shift short-run aggregate supply left?
a. an increase in price expectations
b. an increase in the price level
c. a decrease in the money supply
d. a decrease in the price of oil

11. Trong nền kinh tế mở, cho biết xu hướng tiêu dùng cận biên từ thu nhập quốc dân là 0,8 và xu hướng
nhập khẩu cận biên là 0,4. Thuế là hàm của thu nhập (T = tY)
a. Giả sử đầu tư tăng thêm 150 tỉ đồng còn các yếu tố khác không đổi thì mức sản lượng cân bằng và
xuất khẩu ròng sẽ thay đổi như thế nào?
b. Giả sử xuất khẩu tăng thêm 150 tỉ đồng chứ không phải tăng đầu tư, thì cán cân thương mại sẽ
thay đổi như thế nào?
12. Trong mô hình tổng cầu của nền kinh tế đóng với thuế độc lập với thu nhập và xu hướng tiêu dùng cận
biên bằng 0,8. Cho biết mức sản lượng tiềm năng là 1200 tỉ đồng. Hiện tại sản lượng cân bằng của nền
kinh tế đang ở mức 1000 tỉ đồng. Muốn đạt được mức sản lượng tiềm năng (trong các điều kiện khác
không đổi) thì:
a. Chỉ tiêu của chính phủ cần thay đổi bao nhiêu?
b. Thuế cần thay đổi bao nhiêu?
c. Thuế và chỉ tiêu của chính phủ cùng phải thay đổi bao nhiêu để giữ cho cán cân ngân sách không
bị ảnh hưởng?
d. Dùng đồ thị minh hoạ các tình huống ở trên.
13. Xét một nền kinh tế có xu hướng tiêu dùng cận biên là 0,8 và thuế suất là 1/3. Cả tiêu dùng dự định và
đầu tư đều là 100 tỉ, và chỉ tiêu chính phủ là 500 tỉ.


a. Xây dựng hàm tiêu dùng
b. Xây dựng phương trình biểu diễn đường chỉ tiêu

c. Xác định mức sản lượng cân bằng
d. Ngân sách có cân bằng không?
Bây giờ giả thiết chi tiêu chính phủ giảm xuống 200 và thuế suất giảm xuống 1/6
e. Xây dựng hàm tiêu dùng mới
f. Xác định đường tổng chỉ tiêu mới
g. Xác định mức sản lượng cân bằng mới