Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

EK111 Macroeconomics > Test Questions 2022 > Flashcards

Test Questions 2022 Flashcards

1
Q

Describe the concept of inflation

A

An increase in aggregate price level

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is certain if nominal gdp rises

A

Real gdp, price level or both rise

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the multiplier of the economy if C= 250+0.8Yd

A

5

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What happens when there is a movement to the left along the IS curve

A

A higher interest rate causes a fall in investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What do we know for certain when the expected inflation rate is greater than zero about real interest rate

A

The real interest rate is lesser than the nominal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Adopting more generous unemployment benefits will lead to what in the medium run

A

A higher equilibrium unemployment rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What will happen if policymakers think equilibrium unemployment is lower than it is in reality

A

Higher inflation rate than expected

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What happens to the LM curve when policy rate is lowered

A

It shifts down

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is required to sustain gdp per capita growth in the long run

A

Technological process

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What happens in the slow model at constant return to scale

A

If K and N rise at the same rate the output also does

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

In an economy without technological progress and population growth that is in steady state, what are savings equal to

A

Savings per worker is equal to depreciation per worker

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Will increased population growth or an increased rate of depreciation cause a reduction in the growth of output in the steady state in the long run

A

No because steady state output only depends on technological growth and population growth which has a positive effect in the long run

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

In an economy with both population growth and technological progress. What variable is constant once we have reached a balanced growth path

A

Y/AN output per effective worker

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

A gini coefficient of 0 indicates what

A

Fully equal income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What happens if households suddenly believe in a higher future interest rate

A

The IS curve shifts to the left

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

If you are an American investor and lend money in Germany for 7% but the euro is expected to depreciate by 3% furring the year. How much in dollars could you get back in a year if you lend one $

A

$1.04

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What happens to exports if there is a real appreciation

A

They will fall

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What puts the goods market in equilibrium in an open economy

A

When domestic production equals demand for domestic goods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

If the price levels in two countries are constant, what is the relationship between real and nominal exchange rates

A

They move together with the same percentage change over time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

In a floating exchange rate, what will happen if the interest parity condition holds and expectations and foreign interest rates are constant but domestic interest interests rate is reduced

A

The exchange rate will be depreciated

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

When was the Swedish industrial breakthrough

A

1870-1890

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

When did Sweden transition from a fixed to a floating exchange rate

A

1992

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What characterized the economic situation during the 2010s

A

low interest rates and low inflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What are the accepted ways of calculating gdp

A

Income approach, expenditure approach, production approach and sum of value added

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What is the gdp deflator

A

The ratio of nominal gdp to real gdp

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

In a closed economy where C=250+0.75Yd what increase will +100 G cause

A

400

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

When does the IS curve shift to the right considering G

A

When public spending increases

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Why Is the economy always at the LM curve moving slowly to the IS curve

A

Because the central bank controls LM but it takes like 2 years for the IS curve to react

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

What is real interest rate if nominal is 8% and inflation is 3%

A

5%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

In a country with 70 people 50 are of working age and the labor force consists of 20 with an unemployment if 10% how many unemployed persons are there

A

2

31
Q

If the expected price level in an economy increases by 5% what happens to wages all else equal

A

Nominal wages will increase by exactly 5%. W=Pe*f(u,z)

32
Q

What will happen if policymakers believe that natural unemployment is higher than it actually is

A

Lower than expected inflation rate

33
Q

If a=1 and un = 9% and inflation expectations are fully adaptive, how will the inflation rate change for every year that actual unemployment remains at 6%

A

+3% p.a = -a(u-un)

34
Q

What is the immediate effect on the IS LM PC curve when expected inflation increases

A

Nothing as nothing happens immediately

35
Q

What is the central bank expected to do if a demand shock causes short tun output to exceed potential

A

Raise the policy rate

36
Q

If a country saves more than another what will be the effect on capital per worker in the long run

A

That country will have increased K/N compared to its pears

37
Q

When does capital per worker decrease in an absence of technological progress and population growth

A

When investment per worker is lesser than the investment

38
Q

In the solow model without population or technological progress or population growth what happens to output per worker if you increase the savings rate

A

It increases at a decreasing rate until it reaches the steady state

39
Q

In the solow model with technological progress and population growth is Y/AN K/AN or AN constant

A

AN is not constant but the rest are

40
Q

Ehat do we know about total capital stock in the solow model with both technological progress and population growth that has reached balanced growth path

A

It grows at the rate of ga+gn

41
Q

If the central bank adopts a monetary policy that the financial market expects how does that affect stock prices

A

They remain unchanged by the policy

42
Q

What will happen if the expected future interest rate falls in the ISLM model

A

The IS curve shifts to the right

43
Q

Is a countries export share limited by the gdp

A

No,

44
Q

What is the function describing real exchange rate

A

EP/P*

45
Q

How could a country improve its output while keeping net exports constant

A

By increasing public spending while decreasing the real exchange rate

46
Q

What will always cause a decrease in net exports

A

Increased domestic income

47
Q

According to the mundell Fleming model what will happen to net exports when public spending decreases

A

Net exports increases as imports decrease

48
Q

What will happen to investments in an economy with a fixed exchange rate that reduces public spending

A

It decreases

49
Q

What is the unemployment in a country with 200 million working people, 20 million looking for a job and 40 million discouraged workers

A

9.1%

50
Q

What is the multiplier in an economy where C=300+0.6Yd

A

2.5

51
Q

What will happen if the government lowers taxes on households all else equal

A

The IS curve moves to the right along the LM curve

52
Q

What explains the economy moving right along the IS curve

A

Lower interest rates boosts investment

53
Q

What is the immediate effect of a higher risk premium in the financial market

A

The IS curve moves to the left

54
Q

How is the labor force defined

A

The sum of employed and unemployed

55
Q

What will happen to prices if wages increase by 5% all else equal

A

They will increase by exactly 5%

56
Q

What is the equalibrium level of unemployment if m+z=3.1% and a=0.4

A

Un=m+z)/a
Svar: 7.75

57
Q

Does increased expected inflation increase the equalibrium rate of unemployment

A

No

58
Q

Why does the Phillips curve slope upward in the ISLMPC model

A

Higher short run output leads to higher actual inflation as fewer people are unemployed

59
Q

How will the central bank likely react to the government reducing spending to pay of debt

A

By lowering interest

60
Q

What are the long run consequences of a permanently reduced savings rate

A

Output per worker will be permanently lower than it could have been at that time

61
Q

If there is decreasing marginal to labor and constant return to scale what will happen if labor increases by 3%

A

Output increases by less than 3%

62
Q

In the solow model without population growth and technological progress what happens when you increase the savings rate

A

A temporary increase in the growth of output per worker

63
Q

After a war that does not change anything but capital in an economy without population growth and technological progress what characterizes the immediate future

A

Rapid growth that pans out to zero growth when steady state has been reached

64
Q

What characterizes balanced growth path

A

Capital stock growth rate is equal to growth rate of effective workforce

65
Q

Is Y/N, I, S or K/N constant in balanced growth

A

No

66
Q

What will happen to the stock price if the central bank implements a more strongly expansionary policy than the financial market has been expecting

A

Stock prices rise all else equal

67
Q

What happens in the ISLM model if expected future interest rates rises

A

The IS curve shifts to the left

68
Q

What was the Swedish export share if Swedish gdp in 2021

A

40-50%

69
Q

If the price level of japan is 1 and 2 in Sweden and it one krona is 10 yen what is the real exchange rate between Sweden and Japan from Sweden perspective

A

e = EP/P* E=¥*/¥
Svar: 20

70
Q

If the Marshall Lerner condition holds what would cause a reduction in net exports

A

A higher real exchange rate

71
Q

What will happen to net exports as a result of a tax cut

A

It will be weakened

72
Q

What will an expansionary monetary policy lead to concerning E in an open exchange rate regime

A

It will depreciate the nominal exchange rate

73
Q

How will decreased real estate wealth affect the trade balance

A

Lower total wealth leads to lower consumption which leads to reduced imports

EK111 Macroeconomics (29 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions