TEIL1

Question 1

Current Account

Answer 1

CA = TB + BPI + BSI

Question 2

Capital Account (KA)

Answer 2

KA = Net Receipt of Capital Transfers - Net Acq. of Nonproduced/Fin. Assets

i. Capital Transfers received and granted
* Debt forgiveness
ii. Acquistion and Disposal of nonproduced/Nonfinacial

• Licenses
• Leases
• NOT JUST TEMPORARELY SOLD (Vgl. BPI)

Question 3

Financial Account

Answer 3

Caputres financial assets & liability transactions between residents and non residents

i. Foreign direct Investment
ii. Portfolio Investment
iii. Other Investment
iv. Reserves

FA = Net Acquistions of Foreign Fin. Assets

• Net Incurrence of For. Fin. Liabilites

Question 4

Laspeyres Index

Answer 4

• Using Prices of Base Year 0

Question 5

Paasche Index

Answer 5

• Using Prices of Final Year T Only
  *

Question 6

Annual Chain Weight

Answer 6

Annualy updating of the base year

Question 7

Private Saving

Answer 7

• Savings of the Privat Sector

S(Pvt) = Y + BPI + BSI - T + GT - C

Question 8

Goverment Savings

Answer 8

S(Gov) = T - GT - G

Question 9

National Savings

Answer 9

S = S(Priv) + S(Gov)

S = I + CA

National Savings can be allocated for two uses

1. Funding the domestic accumulation of physical capital (through I)
2. Funding the Current Account balance, that is being a net lender to the rest of the world (if CA>0)

Question 10

National Wealth

Answer 10

• is the total wealth of the residents of an economy

National Wealth = K + (FOA - FOL)

K: Domestic Economy Capital Stock

• Domestic Wealth

Net International Investment Positon (NIIP)

• (FOA - FOL)
• Domestic Wealth Abroad

Question 11

Capital Accumulation Function

Answer 11

K_t+1 = I_t + (1-D)*K_t

Question 12

Pro-Cyclical

Answer 12

Buisness-Cycle Correlation is Positive

Question 13

Counter-Cylical

Answer 13

Buisness-Cycle Correlation is Negative

Question 14

A-Cyclical

Answer 14

Buisness-Cycle Correlation is near Zero

Question 15

NDP

Answer 15

Net Domestic Product

= GDP - (Consumption of fixed Capital Depreciaton)

• Net measures conveys how much income is available if the value of the produtive capacities is to be maintained

Question 16

Insurance Premium paid to a foreign country - BPI or BSI?

Answer 16

BSI

Question 17

GNP

Answer 17

Gross National Product =

GDP + BPI

• Domestic RESIDENTS irrespectively where they earned it

Question 18

GDP

Answer 18

• within border of the domestic economy
• irrespectively of residents nationality

Question 19

BPI

Answer 19

BPI =

+ Primary Income Received from Nonresidents

• Primary Income Paid to Nonresidents

Question 20

Primary Income Received

Answer 20

represents the return received by residents for providing to non-residents temporarly

• labor
• financial resources (dividends, interest income)
• non produced non financial assets (licenese, leases,..)

Question 21

Secondary Income Received from Nonresidents

Answer 21

represents the return received by residents without providing a corresponding return of an intem of economic value

• remittances (Geld nachhause schicken)
• social contributions
• insurance premiums
• tax

Question 22

Balance of Payments

Answer 22

accounting system in Macro that we use to record any cross border economic transactions from residents to non-residents

Question 23

Price Level

Answer 23

Price Level

= Nominal GDP / Real GDP

Question 24

Laypeyres

Answer 24

Using prices of base year 0 only

• Laspeyres overstates the contribution of goods which have become cheaper

Question 25

REAL GDP

Answer 25

• shows TRUE national income
• takes prices and inflation therefore into consideration

Question 26

Rate of Inflation

Answer 26

GDP DEFLATOR based inflation

= g_{Yt^{Nominal -}} g_Yt^Real

Question 27

GNDP

Answer 27

Gross National Disposal Product (GNDP)

+ GNP

+ BSI

• GNDP is income of domestic Residents plus net transfers from/to non residents

Question 28

Problems GDP as a Measure of Standard of Living

Answer 28

• some goods are not captured in GDP
  
  • home production, illegal activites
• changes in quality

HDI (“Human Development Index”) takes into account Health, Education,…

Question 29

Core inside of BoP

Answer 29

If more Exports the Import then it MUST mean that we are willing to invest financial wealth abroad

Question 30

Potential Problems with our Measuring of National Wealth

Answer 30

Our Measurment of National Wealth leaves out:

1. “Human Capital”
   
   • education & skills of the people
2. “Natural Captial”
   
   • including the economys land, forest, fossil fuels

Alternative: Use “Inclusive Wealth Index”

Question 31

GDP deflator based Inflation

Answer 31

π = g^Nominal - g^{<strong>ANNUAL CHAIN WEIGHT</strong>}