Download c=0 - UNEC

1. What does the Macroeconomics study?
2. What is GDP? The uses of GDP. What are the methods of measuring GDP?
Thoroughly explain each component of GDP using expenditure method.
3. What is GDP? The uses of GDP. What are the methods of measuring GDP?
Thoroughly explain each component of GDP using income method.
4. What is GDP? The uses of GDP. What are the methods of measuring GDP?
Thoroughly explain product approach of measuring GDP.
5. National income, Personal income, Personal disposable income.
6. How nation’s saving is calculated? What are the uses of nation’s saving?
7. Real and nominal GDP, GDP deflator. Explain why economists use Real GDP
as a measure of economic well-being?
8. Explain how equilibrium income (output) is calculated. Show equilibrium
income and output level on graph using Keynesian model
9. What is expenditure multiplier? How it is calculated? How is fluctuations in
economic activity explained using expenditure multiplier?
10.Automatic stabilizers. Income tax as an automatic stabilizer.
11.How Fiscal policy changes affect equilibrium income and output?
12.Budget surplus: Using graphical analysis explain relationship between income
and budget surplus. State, whether increase in Government purchases of goods
and services will increase or decrease budget surplus.
13.Explain the reasons of downward sloping aggregate demand curve. What
causes AD curve to shift?
14.Explain Aggregate supply in the short run and long run time period. What
causes Aggregate supply to shift?
15.Explain the effect of negative demand shocks on short –run and long-run
equilibrium.
16.Negative supply shocks. Stagflation. The results of negative supply shock in the
presence and absence of government policies.
17.For each of the following events, explain the short-run and long-run effects on
output and the price level, assuming policymakers take no action: a) The stock
market declines sharply, reducing consumers’ wealth; b) The federal
government increases spending on national defense; c) A technological
improvement raises productivity; d) A recession overseas causes foreigners to
buy fewer U.S. goods.
18.Fiscal Policy and its Objectives. Instruments of the Fiscal Policy.
19.Contractionary and expansionary Fiscal Policy. Discretionary and Automatic
Fiscal Policy.
20.The Effect of fiscal policy in the long-run from viewpoint of investment,
inflation and net export. Crowding-out effect.
21.Implications of Ricardian equivalence
22.Laffer Curve
23.The below data is taken from NIPA (National income and product accounts) of
a hypothetical economy:
Gross private domestic investment=40
Government purchase of goods and services=30
GNP=200
Current account balance=-20
Taxes=60
Government transfer payments to the domestic private sector=25
Interest (from government to the domestic private sector) =15
Income paid for factor of production (to the rest of the world) =7
Income paid for factor of production (from rest of the world) =9
Calculate the following:
a. Consumption
b. Net exports
c. GDP
d. NFP
e. Private saving
f. Government saving
g. National saving
24.Suppose than an economy consists of only two types of products: computers
and automobiles. Sales and price data for these two products for two different
years are as shown below. (Take 2000 as a base year) (2)
Year
2000
2010
Quantity
of
computers
1000
2500
Price of
computer
Quantity
of cars
Price of
car
$1000
$500
100
150
$15000
$20000
a. Calculate Real and Nominal GDP for 2000 and 2010.
b. Calculate average annual growth rate of Real GDP.
25.Suppose Congress decides to reduce transfer payments (such as welfare) but to
increase government purchases of goods and services by an equal amount. That
is, it undertakes a change in fiscal policy such that ΔG =−ΔTR.
a. Would you expect equilibrium income to rise or fall as a result of this
change? Why? Check your answer with the following example: Suppose that,
initially, c=0 .8, t=0.25, and Y0 = 600. Now let ΔG=10 and ΔTR=-10.
b. Find the change in equilibrium income, ΔY0.
c. What is the change in the budget surplus, ΔBS ? Why has BS changed?
26.The effect of expansionary monetary policy on money market and goods market.
27.What is monetary base, money supply and money multiplier?
28.Explain money creation mechanism of banks.
29.Because of an economic slowdown, the Federal Reserve Bank of the (3)
United States lowered the federal funds rate from 4.25% to 2.00%. The idea
was to provide a boost to the economy by increasing aggregate demand.
a) Use the liquidity preference model to explain how the Federal Reserve Bank
lowers the interest rate in the short run. Draw a typical graph that illustrates the
mechanism.
b) Explain why the reduction in the interest rate causes aggregate demand to
increase in the short run.
c) Demonstrate the effect of the policy measure on the AD curve. Use the LRAS
curve to show that the effect of this policy measure on the AD curve, other
things equal, causes the aggregate price level to rise in the long-run.
30.Quantity theory of money. How does increase in money supply affect economy
in the long run?
31.Why do people hold money?
32.Money demand curve. Liquidity preference theory.
33.Explain short-run effect of expansionary fiscal policy on IS-LM model.
34.Explain short-run effect of contractionary monetary policy on IS-LM model.
35.Explain how Required Reserve Ratio, public’s desire to hold currency in cash
affect money supply.
36.If Central Bank increases money supply, how it will affect loanable funds
market (show on graph).
37.Unemployment and output gap. Okun’s law.
38. Explain the causes of inflation.
39.Explain how government reduces unemployment through monetary and fiscal
policy.
40.Short-run and Long-run effect of increase in money supply.
41.Suppose Congress decided to reduce taxes. Explain the type of policy that
Central Bank should undertake in order to keep interest rate constant.
42.Why is unemployment rate considered to understate actual unemployment?
43. Explain the reason of cyclical unemployment and policies to reduce cyclical
unemployment.
44.Explain the reasons of structural unemployment.
45.What is hyperinflation? What are the reasons of hyperinflation?
46.Why is the devastating effect of anticipated inflation less than unanticipated
inflation?
47.Who are the losers from unanticipated inflation? Why?
48.Short-run and long-run relationship between inflation and unemployment.
49.Compute inflation rate if consumption basket consist of 3 pizzas and 2 colas
Price of pizza
Price of Cola
2015
$10
$5
2016
13
$6
50.Show the effect of open market operations (both purchase and sale) on money
market.
51.Role of saving in economic growth.
52.Golden Rule in steady state theory.
53.The role of technological progress in Solow economic growth theory
54.The role of population growth in Solow economic growth theory
55.Explain why net capital outflow is equal to trade balance of the economy
56.How fiscal policy affect trade balance.
57.How fiscal policy abroad affect trade balance
58.How change in investment affect trade balance
59.Balance of payment and its accounts
60.Giving an example explain the relationship between the accounts of BoP.
61.How fiscal policy affect real and nominal interest rate
62.How fiscal policy abroad affect real and nominal interest rate.
63.How change in investment affect real and nominal interest rate.
64.Explain the difference between real and nominal exchange rate
65.Determinants of real exchange rate.
66.Determinants of nominal exchange rate.
67.Exchange rate regimes.
68.Main implications of classical economics
69.Implications of Keynesian economics
70.Monetarist view on fiscal policy
71.Implications of monetarist economics.
72.Main implications of new classical economics.
73.Rational expectations. Incorporating Rational expectations on AD-AS model.
74.New Keynesian economics.
75.Real business cycles