Download Economic policy, examination questions, school year 2007-2008

Economic policy, examination questions, school year 2014-15, summer semester
A. Questions, where brief, compact answer is required
1. Hyperinflation in some European countries after WWI: basic causes.
2. Short term economic policy of Stop and Go, principles and mistakes.
3. Main features of gold standard before WWI
4. Alternative explanations of the origin, depth and duration of Great Depression
5. Disinflation policies and twin deficits in the US economy in the first half of 1980s
6. Inflation targeting and Taylor’s rule – basic features
7. Define natural rate of unemployment
8. Explain a concept of stagflation
9. New Deal – basic characteristics
10. The dawn of European integration after WWII
11. Problems and termination of Bretton-Woods system at the beginning of 1970s
12. Bretton-Woods institutions and their mission
13. Main positive results of Marshall plan
14. Explain a concept of “corporative capitalism” and give the examples of practical use
after WWII
15. Phillip’s curve in its original form: short explanation, trade-off between inflation and
unemployment
16. Expectations-augmented Phillip’s curve
17. Keynesian stabilization policies in 1960s
18. Disinflation in the US at the beginning of 1980s: basic measures
19. Basic contributions of Keynes’ General Theory
20. Stabilization policies with Bretton-Woods system of fixed exchange rates:
expenditure changing vs. expenditure switching
21. Anticipated and un-anticipated monetary policy – explain the difference
22. Basic roots of global financial and economic crisis 2008-2009
23. Nominal convergence criteria for Euro zone entry
24. “Price-specie-flow” mechanism and “rules of the game”. Explain these concepts from
the gold standard period.
25. Main economic policy measures to stabilize hyperinflations in Germany and other
countries in 1920s.
26. “The longer country stayed on gold standard, the deeper was its depression”.
Comment.
27. Equilibrium with involuntary unemployment. Explain.
28. Okun’s law.
29. Inflation stabilization in Izrael and Bolivia in 1980s. Basic lessons.
30. Great Moderation – reality or mistake?
31. The start of Bretton-Woods system of fixed exchange rates after WWII, the role of
US dollar.
32. Main causes of the crisis of Euro after 2010.
B. Questions, with answers just Yes or No
1.



Bretton-Woods system
was based on fixed exchange rates
reserve currency was British pound
was terminated in November 1967 after the devaluation of British pound
2. Phillips curve
 is important for economic policy, it is a basis for a trade-off between unemployment
and interest rate
 for the first time, it has been defined on British data as a relation between wage
inflation and unemployment
 in 1970s and 1980s, the data fully confirmed its validity both for short- and long-run
3. Neoclassical synthesis
 was a result of Keynesianism coming closer to monetarism


in the short-run, allows for unemployment because of insufficient aggregate demand,
in the long-run, the aggregate supply is vertical
in the long-run, allows for full employment equilibrium only
4. Stabilization policy in 1960s
 Okun’s law is a relation between the change in unemployment rate and difference
between actual and natural GDP growth
 Phillip’s curve is a relation between inflation and exchange rate
 for short-run stabilization, monetary policy was considered as entirely inefficient
5.



Price-specie-flow mechanism is
a monetarist concept of adjustment to change in money supply
automatic BoP adjustment in the period of gold standard
is related to Okun’s law
6.



NAIRU is
non-accelerating inflation rate of unemployment
non-accelerating inflation rate of interest
neutral inflation, consistent with low unemployment
7. “Impossible Trinity” means
 impossible to achieve simultaneously low inflation, low unemployment and rapid
economic growth
 impossible simultaneously to liberalize foreign trade, labor movements and capital
flows
 none of the above
8.



The concept of “Great Moderation” reflects
low unemployment after WWII
rapid fall of volatility of both output and inflation after 1980 in advanced economies
decelaration of economic growth in Europe after WWII
9.



Quantitative theory of money
uses the concept of expected inflation
implies money neutrality
assumes constant velocity of money
10. Possible causes of length and depth of Great Depression
 New York stock exchange crash in October 1929
 too low growth of money supply during several years after 1929
 inefficient gold standard system
11. Following measures and/or institutions were important part of New Deal
 National Industry Recovery Act (NIRA)
 Unions for America (UfA)

Federal Deposit Insurance Corporation (FDIC)
12. Bretton-Woods system introduced
 fixed exchange rate, based on a parity of British pound to gold
 system of flexible exchange rates
 system of fixed exchange rates and US dollar became quickly a generally accepted
reserve currency
13. Neoclassical synthesis
 aggregate supply is horizontal in the long-run
 in the long-run, the adjustment is the same as in the classical model
 it is a representative theory of monetarism
14. Sacrifice ratio is
 rate of fall of output as a consequence of disinflationary policy
 amount of private investment, crowded-out by higher governmental expenditures
 fall of exports after revaluation of domestic currency