Macroeconomics Final

I.
Trắc Nghiệm
1. When the consumer price index falls, the typical family
a. has to spend more dollars to maintain the same standard of living.

b. can spend fewer dollars to maintain the same standard of living.
c. finds that its standard of living is not affected.
d. can save less because they do not need to offset the effects of rising prices.
2. The economy's inflation rate is the

a. price level in the current period.
b. change in the price level from the previous period.
c. change in the gross domestic product from the previous period.
d. percentage change in the price level from the previous period.
3. You receive money as payment for babysitting your neighbors' children. This best
illustrates which function of money?
a. medium of exchange
b. unit of account
c. store of value
d. Liquidity
4. GDP is defined as the
a.value of all goods and services produced within a country in a given period of time.
b.value of all goods and services produced by the citizens of a country, regardless of where
they are living, in a given period of time.
c.value of all final goods and services produced within a country in a given period of time.
d. value of all final goods and services produced by the citizens of a country, regardless of
where they are living, in a given period of time.
5. 5. A macroeconomist, as opposed to a microeconomist, to be particularly

interested in
explaining how economic changes affect prices of particular goods.

a.
b. devising policies to deal with market failures such as externalities and market power.
c. devising policies to promote low inflation.
d. identifying those markets that are competitive and those that are not competitive.
6. Macroeconomists study
a. the decisions of individual households and firms.
b. the interaction between households and firms.
c. economy-wide phenomena.
d. regulations imposed on firms and unions.
7. the term inflation describes a situation in which

a. some prices are rising faster than others.
b. the economy's overall price level is rising.
c. the economy's overall price level is high, but not necessarily rising.
d. the economy's overall output of goods and services is rising faster than the economy's
overall price level.
8. The inflation rate you are likely to hear on TV and the Internet is calculated
from
a. the industrial production.
b. the CPI.
c. the VN index.
d. the GDP deflator.
9. You pay for milk tea and ice-cream from the shop with currency. Which
function of money does this best illustrate?
medium of exchange
a.
b. unit of account
c. store of value
d. Liquidity
Liquidity is a term that describes the degree of flexibility of any asset in that
trading in the market does not change the market value of that asset. More
simply, liquidity represents the ability of an asset or product to be converted into
cash.
10. Which list ranks assets from most to least liquid?

money, bonds, cars, houses
a.
b. money, cars, houses, bonds
c. bonds, money, cars, houses
d. bonds, cars, money, houses
11.Under a fractional-reserve banking system, banks
hold more reserves than deposits.
a.
b. generally lend out a majority of the funds deposited.
c. cause the money supply to fall by lending out reserves.
d. All of the above are correct.
12.Gross domestic product measures
a. income and expenditures.

b. income but not expenditures.
c. expenditures but not income.
d. neither income nor expenditures.
13.Which of the following is a way to compute GDP?
a. add up the wages paid to all workers

b. add up the quantities of all final goods and services
c. add up the market values of all final goods and services
d. add up the difference between the market values of all final goods and services and then subtract the
costs of producing those goods and services
14. Which of the following would likely be studied by a macroeconomist rather than a
microeconomist?
a. the effect of an increase in the alcohol tax on the market for beer
b. the effect of foreign competition on the domestic auto industry
c. the effect of a price war in the airline industry
d. the effect of an increase in the minimum wage on an economy’s overall rate of unemploy
15. If the price level increased from 120 to 126, then what was the inflation rate?
a. 3 percent
b. 5 percent
c. 6 percent
d. None of the above is correct.
16. Which of the following statements about GDP is correct?
a. GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the
economy’s output of goods and services.
b. Money continuously flows from households to firms and then back to households, and GDP measures this flow of
money.
c. GDP is generally regarded as the best single measure of a society’s economic well-being.
d. All of the above are correct.
II. Tự luận
A. Short answers
1. What are the indices used to measure the price level? _CPI,PPI, GDP deflator.
2. You here that inflation in December rises by 5% compared with inflation in November.
What is the measure used to calculate inflation here? Explain your choices in less than 2
lines
3. When the central bank increases the money supply, the nominal exchange rate will:
a) Depreciate; b) Appreciate? Briefly explain your answers
4. When the Ministry of Finance decides to increase the fuel price, which of the following is
correct?: a) only the GDP deflator increases; b) only the CPI increases; c) only the inflation
increases; d) all of them are incorrect; e) all of them are correct. Briefly explain your answer
5. Write down the equation (identity) for the Quantity Theory of Money. Explain each
components of the equation.
6. When the central bank increases money supply (also the quantity of money), what would
happen?
more money => lower interest rates=> domestic currency becomes less attractive, lower
demand for domestic currency, higher demand for foreign currency=>domeestic currency
depreciates
B. Long answers.
1.The table below reports nominal and real GDP for the U.S. from 1929 to 1932.
Year Nominal GDP Real GDP

1929 103.6 977
1930 91.2 892.8
1931 76.5 834.9
1932 58.7 725.8
a. Calculate the GDP deflator for the year 1931
b. Calculate inflation rate in 1931
c. Calculate the growth rate of nominal GDP and real GDP in 1930. Which is the better gauge of
economic well-being?
2. Suppose the Venezuelan economy produces only cereal and milk. Quantities and prices of these
goods for the last several years are shown below. The base year is 2008.
Prices and Quantities
Year Price of Cereal Quantity of Cereal Price of Milk Quantity of
Milk
2008 $4.00 90 $1.50 150
2009 $4.00 100 $2.00 180
2010 $5.00 120 $2.50 200
2011 $6.00 150 $3.50 200
a. Calculate the country’s real GDP and GDP deflator in 2008
b. Calculate the country’s real GDP in 2009 and 2010
c. Calculate the country’s GDP deflator in 2009 and 2010
d. Calculate the country’s inflation in 2010 and 2011
3.Suppose the Chinese economy produces only movies and popcorn. Quantities and prices of
these goods for the last several years are shown below. The base year is 2009.
Prices and Quantities
Year Price of Quantity of Movies Price of Popcorn Quantity of
Movies Popcorn
2008 $10.00 400 $5 800
2009 $11.00 500 $4 900
2010 $12.00 600 $5 1000
2011 $12.00 600 $6 900
a. Decide in which year that country has the highest real GDP
b. Decide in which year that country has the highest nominal GDP
c. Calculate the country’s GDP deflator in 2010
Keys:
I. TN
1. B 6. C 11. B
2. D 7. D 12. A
3. A 8. B 13. C
4. C 9. A 14. A
5. C 10. A 15. B
16. D
II. TL
B.
1. a. 9,126%
b. 10.3%
2. a.real GDP: $585
GDP deflator: 100%
b.2009: $670
2010: $780
c.2009: 113,4%
2010: 141%
d.2010: 24.3%
2011: 26.1%
3.

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I.

1. When the consumer price index falls, the typical family

a. has to spend more dollars to maintain the same standard of living.

2. The economy's inflation rate is the

4. GDP is defined as the

5. 5. A macroeconomist, as opposed to a microeconomist, to be particularly

explaining how economic changes affect prices of particular goods.

7. the term inflation describes a situation in which

10. Which list ranks assets from most to least liquid?

12.Gross domestic product measures

a. income and expenditures.

13.Which of the following is a way to compute GDP?

a. add up the wages paid to all workers

16. Which of the following statements about GDP is correct?

Year Nominal GDP Real GDP

Prices and Quantities

Year Price of Cereal Quantity of Cereal Price of Milk Quantity of

Year Price of Quantity of Movies Price of Popcorn Quantity of

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