Chapter 1: Introduction to Macroeconomics

Answer the following multiple choice questions:

1) Macroeconomics study:
a) price and inflation
b) growth rate of the economy
c) unemployment rate and balance of payment
d) all of the above
2) Which of the following statements is normative economics:
a) the government increased money supply will lead to inflation
b) the government needs to cut unemployment
c) cutting unemployment benefits will reduce the natural rate of unemployment
d) none of the above is normative
3) The most important issue in macroeconomic is:
a) Unemployment
b) Inflation
c) Output
d) Balance of Payments
4) Economics study :
a) how to satisfy all the needs of everyone
b) how society manage its scarce resources
c) the way society avoids tradeoffs
d) how to reduce human desire to a minimum level
5) Macroeconomists differ from microeconomists because macroeconomists are interested in:
a) the total sales of the larger companies other than the total sales of small and medium
enterprises
b) the unemployment rate of the economy rather than the unemployment rate in the
financial sector of Vietnam
c) relative price of rice compared to the general price level of the economy
d) the demand for food versus the demand for labor in Vietnam

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Chapter 2: Measuring national output& national income
Exercise
1) Are these activities part of GDP?
a) Mrs Hoa picks flowers in her garden.
b) Fruits are sold on the market.
c) Patients, hurt in a car accident, are treated in a hospital.
d) Pensioners do community work for free.
e) A garage buys spare tyres to sell them to customers next year.
2) Which of the following transactions will be included in Vietnam's GDP?
a) Coca-Cola Company builds a bottling plant in Da Nang.
b) Vietnam Airline sells one of their aircraft to Lao Airlines.
c) Mai buys stock of FPT company.
d) The Dalat wine maker produces a fine bottle of wine and sells it to a customer in
Montreal, Canada.
e) A Vietnamese buys a bottle of perfume from France.
f) A book publisher produces too many editions of a new book; number of books can not
sold this year are put into inventory.
3) Explain whether the following activities will be included in GDP or not? And why
a) Study time of students
b) Income of smugglers
c) Salaries of public notary officers
d) Income of securities brokers.
e ) Trading stocks and bonds on the financial market
f) The work of housewives in the home
g) Mr Hoa has just sold a used Honda for 1 year
h) Ngoc has recently sold an antique

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4) An animal from may be trapped

Imagine a simple economy with only a few people. There are three sectors in this economy.
a. Primary. A possum farmer who traps possums and sell all his output to a pie-maker for $1000
in a year
b. Secondary. The pie maker who buys the possum meat and, with the help of an assistant, makes
it into pies, selling all her output to a retailer. She sells the finished pies for $4000, paying her
assistant $1000.
c. Tertiary. The retailer who buys the pies and, using a salesperson, then resells them to the
public for $7000. The salesperson is also paid a salary of $1000.
Calculate GDP with three methods.
5) Nominal GDP in 2006 was 12500, real GDP in 2006 was 11200.
    Nominal GDP in 2007 was 15000 and the inflation rate in 2007 was 12%
a) Calculate the price index and real GDP in 2007
b) Calculate the economic growth rate in 2007
6) Nominal GDP in 2010 was 20000, real GDP in 2009 was 15000
In 2009, price level increased by 10% over the base year.
    In 2010, price level increased by 12.1% over the base year.
Calculate the inflation rate and the growth rate of 2010.

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7) Complete the following table
2011 2012 2013
GDP 4532 4804 ???
Consumption ??? 3320 3544
Investment 589 629 673
Government expenditure 861 ??? 977
Net exports -45 -58 -54

Answer the following multiple choice questions:

1) Which of the following are included in the total investment of the economy:
a) Paying house rent
b) Paying for teacher salaries
c) Inventory increased
d) All of the sentence above are correct
2) The price index in 2002 was 125 mean that:
a) Commodity prices in 2002 increased by 25% compared to 2001
b) The inflation rate in 2002 was 25%
c) Commodity prices in 2002 increased by 25% over the base year
d) a, b, c are both wrong
3) According to expenditure approach, GDP is the sum of:
a) Consumption, investment, government spending, and net exports
b) Consumption, investment, government spending, and export
c) Consumption, investment, government transfers, net exports
d) Consumption, investment, government transfers, exports
4) Nominal GDP in 1997 was 6000 billion. Nominal GDP in 1998 was 6500 billion. The 1997
price index was 120. The 1998 price index was 125. The growth rate in 1998 was:
a) 8,33%
b) 4%
c) 4.5%
d) ten%
5) To calculate GNP from GDP, we need to add:
a) net income from abroad

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 b) net exports
c) net tax
d) a, b, c are true
6) The government subsidizes 100 billion VND for flood victims. These households extract 90
billion VND to buy food. According to the expenditure approach, this expenditure 90 billion
VND will be included to .... in GDP:
a) Spending on government investment
b) Spending on government purchases of goods and services
c. Spending of foreigners
d. spending on household’s goods and services

Chapter 3: Determination of equilibrium output

Exercise
5
1) In a closed economy, there is no government
Yd 0 200 400 600 800 1000
C 10 260 420 580 740 900
0
a) What is the value of Co and Cm?
b) Consumption function? Saving function?
c) Find the neutral point at which disposable income is equal to expenditure (C = Yd)
2) Suppose Cm = 0.6 and Im = 0
a) Multiplier value?
b) If autonomous investment increases by 25, what is the extra output?
c) If autonomous consumption is 60, autonomous investment is 90, what is the
equilibrium output?
3) C= 100 + 0,8Yd
I=150+0,2Y
G=400
T=0,2Y
X=500
M=200+0,24Y
a ) Determining the national equilibrium output and trade balance?
What is the situation of government budget?
b) If government spending increases 70, how does the output change?
c) If the exports increase by 100, how does the output change?
4) C= 15 + 0.9 Yd
I = 80
G= 200
Tr = 10
Tx = 0.1Y
X = 120
M = 24 + 0.06 Y
a) Calculate the net tax fuction
b) Calculate the equilibrium output by aggregate demand-aggregate supply method

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 c) Calculate equilibrium output by the method:
S+T+M=I+G+X
d) When the economy is in equilibrium, is the government budget surplus or deficit?
e) When the economy is in equilibrium, trade surplus or deficit?
5) A country has the following information:
Autonomous consumption is 500
Marginal propensity to save is 0.2
Autonomous investment is 800
Marginal propensity to invest equals 0.12
Autonomous tax is zero
The marginal tax rate is 0.15
Government spending is equal to 1000
Export is 400
Autonomous Import is equal to 200
Marginal propensity to import is equal to 0.05
Question:
a) Calculate equilibrium output, trade balance, and budget balance. Calculate the total
savings of the economy.
b) Calculate the amount of government expenditures or taxes that need to be adjusted
knowing the potential output is 9000
c) If the marginal tax rate is the same, then what is value of government spending in order
to balance the government’s budget?
d) If the government wants to spend 200 more but do not want to make output change,
how much taxes should be changed?
e) If the government increases the spending 50 and increase the tax 50, how much the
aggregate demand and output change?

Chapter 4: Money&Banking & Monetary Policy

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Exercise
1) An economy has the following information:
H = 18000 cc = 20% rr = 10% er = 10%
a) Calculate M and C
b) The Central Bank increases required reserve ratio to 20%, what this policy aims to do
and how money supply will change?
c) The Central Bank lowers the discount rate to encourage commercial banks to borrow
500 more, at the same time Central Bank buys government bonds on the open market 300, what
is the target of this policy and how does M change?
d) If the Central Bank wants to increase the money supply 300 more. What should the
Central Bank do?
cc+1
2) Consider the money supply equation: M =( )H
cc+ rr
  where M is the money supply, H (or MB) is the monetary base, the ratio of money in
circulation relative to deposit cc = C/D, required reserve ratio rr = RR/D.
a) If we known cc = 0.35 and rr = 0.10. Suppose that the Central Bank wants to raise
money supply 1.000 through an open market operation. What should the Central Bank do?
b) In addition to open market operations, what tools do the Central Bank do to increase
the money supply?
c) After conducting open market operations in question a, will the central bank 100%
sure that the money supply will increase to 1.000? Briefly explain your reasoning.
3) An economy has the following information:
Money supply M= 90.000,
Money demand function DM= QMD/P =1900- 1000r,
C =800+0.8Yd
T = 100 + 0.5Y,
I =400+ 0.7Y -1000r,
G=500,
X=700,
M=120+0.6Y.
a) If P = 50, determine the equilibrium interest rate in the money market

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 b) Determine the equilibrium output
c) If the central bank sells government bonds and M decreases from 90.000 to 85.000,
other factors remain unchanged. Determine the new equilibrium output of the economy.
4) In a discussion on money market, two students A and B raised the following arguments:
Student A: The money demand function shows the inverse relationship between money
demand and interest rates. We can see that when interest rate rises, demand for money decreases
and when interest rate falls, demand for money increases.
Student B: In an analysis in class, I found the lecturer arguing that “rising demand for
money led to higher interest rate”. So this is not a negative relationship.
  Who is right and who is wrong?
Answer the following multiple choice questions:
1) If the central bank wants to increase the nominal money supply, they will
a) Buying Government Bonds, increasing the required reserve ratio, reducing the
discount rate.
b) Selling Government Bonds, increasing the required reserve ratio, reducing the discount
rate.
c) Selling Government Bonds, reducing the required reserve ratio, increasing the discount
rate.
d) Buying Government Bonds, reducing the required reserve ratio, reducing the discount
rate.
2) The ratio of cash to deposit is 60%, required reserve ratio is 20%. The central bank sells 5
billion VND of government bonds that will make the money supply change:
a) Increase 5 billion VND
b) Reduce 5 billion VND
c) Reduce 10 billion VND
d) Increase by 10 billion VND
3) Under ideal conditions, the simple money multiplier would be equal to:
a) One divided for the ratio of cash flow
b) One divided for bank deposit
c) One divided for the loan ratio
d) One divided for the required reserve ratio

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4) When interest rate falls, how is national output affected?
a) Decrease investment, reduce output
b) Increase investment, reduce output
c) Reduce investment, increase output
d) Increase investment, increase output
5) A person transfers 1 billion VND from saving account to checkable deposits, then
a) M1 and M2 both decrease
b) M1 decreases and M2 increases
c) M1 and M2 increase
d) M1 increases, while M2 does not change
6) Find the wrong sentence about real interest rates and nominal rates:
a) Real interest rate is the rate that eliminates the inflation.
b) real interest rate = nominal interest rate + inflation rate
c) real interest rate = nominal interest rate - inflation rate
d) nominal interest rate = real interest rate + inflation rate
7) When the central bank increases the discount rate, the real money supply curve SM will:
a) Move right
b) Move left
c) Moving upwards
d) Moving downwards
8) The commercial banking system has total deposits 10.000. The total amount of money
allowed to lend is 9.200. The monetary base is 20.000. The required reserve ratio is:
a) 0,2
b) 0,92
c) 0,08
d) 0,1
9) The commercial banking system has total deposits 10.000. The total amount of money
allowed to lend is 9.200. The monetary base is 20.000. The simple money multipler is:
a) kM = 9,2
b) kM = 10
c) kM = 12,5

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 d) kM = 15
10) The commercial banking system has total deposits 10.000. The total amount of money
allowed to lend is 9.200. The monetary base is 20.000. The money supply is:
a) 125.000
b) 115.000
c) 200.000
d) 250.000
11) If the overall price level of the economy rises, other conditions stay the same, the real money
supply will:
a) increase
b) decrease
c) not change
d) can not determined
12) When the central bank changes the required reserve ratio of commercial banks:
a) The money supply varies due to the change in money multiplier
b) The money supply varies due to the change in high power money
c) Both sentences above are correct
d) Both sentences above are incorrect
13) The central bank decided to buy government bonds, then
a) The monetary base remains unchanged, but the money supply increases
b) The monetary base increases but the money supply does not change
c) Both monetary base and money supply decreased
d) The monetary base and money supply increased
14) The banker said the DongA bank had an amount of cash of $5 million. She also said the bank
had $300 million in deposits and $255 million in loans. Based on this information, what is the
required reserve ratio?
a) 50/255
b) 40/255
c) 50/300
d) 40/300
15) If inflation rate changes, the nominal rate increases to 5%, the real interest rate will

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 a) Increase 5%
b. Increase but less than 5%
c. Reduce but less than 5%
d. Unclear
16) Suppose Central Bank requires commercial banks to keep 10% of deposits. A bank has an
excess of $20,000 in cash and then sells to the central bank the government bonds worth $9,000.
How much does this bank can lend out if it decides to keep the required reserve ratio?
a) $29,000
b) $28,100
c) $19,100
d) $ 11,000

Chapter 5: IS-LM model

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Exercise
1) Using the IS-LM model to analyze the impact of expansionary fiscal policy on output and
interest rates?
2) What is “Crowding out” effect?
3) Using the IS-LM model to analyze the impact of expansionary monetary policy on output and
interest rates?
4) Using the IS-LM model, illustrate what happens to interest rates, income, consumption, and
investment when central bank reduces money supply.
5) Suppose the economy is in recession. Use the IS-LM model to show policy possibilities to
bring the economy to potential output.
6) Suppose the government wants to boost up the economy's investment without increasing
aggregate demand. Use the IS-LM model to present a mix of monetary and fiscal policy that will
help the government achieve this goal.
7) A country has the following information:
C=100+0,75Yd I=100+0,05Y-50r G=300
T= 40+ 0,2Y M= 70+0,15Y X=150
a) Write the equation of the IS
Money supply SM =600
and Money demand function DM = 500+0,2Y – 100r
b) Write down LM equation
c) From the result of a and b, determine the output and the interest rate equilibrium.
Answer the following multiple choice questions:
1) Which of the following would shift the IS curve to the right?
a) A decrease in the real interest rate.
b) An increase in government expenditure.
c) An increase in the tax rate.
d) An increase in the money supply.

2) When the economy is on the left of the IS curve and to the right of the LM curve. To achieve a
general balance:
a) Output will increase b) Interest rates will increase

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 and interest rates will decrease
c) Output will decrease and interest rates will decrease
d) Output will decrease and interest rates will increase
3) Which of the following is not true about LM curve:
a) LM curve has an upward slope
b) Shifts of LM curve reflects changes in fiscal policy
c) LM curve represents a balance in the money market
d) LM is affected by money demand
4) Fiscal policy expansion will increase national output more if:
a) Raising interest rates
b) Combined with narrowing monetary policy to raise interest rates
c) Combined with expansionary monetary policy to keep interest rates unchanged
d) Stabilize interest rates
5) The downward shift of LM curve in the IS-LM model shows that
a) Expansionary fiscal policy
b) Contractionary fiscal policy
c) Monetary policy easing
d) Interest rate policy

Chapter 6: AD-AS model

Exercise
14
1) Explain whether each of the following events shifts the short-run aggregate-supply curve, the
aggregate demand curve, both or neither. For each event, that does shift a curve, use a diagram to
illustrate the effect on the economy.
a) Households decide to save a larger share of their income.
b) A bacterial disease that infects rice affects rice growers in the Mekong river delta.
c) The birth rate shoots up nine months after a power blackout.
2) The chart below presents the current macroeconomic situation in the economy of Albernia.
You are hired as an economic advisor to help the economy move to the potential output level YP.

a) Albernia is facing inflation or recession?

b) What type of fiscal policy – expansionary or contractionary - will shift the Albernia
economy to potential output, YP? Give some examples of these policies.
c) Illustrate the Macroeconomic situation in Alberta with a graph after successful policy.
3) Draw the AD-AS diagram for the Vietnam economy starting in a long-run equilibrium.
When oil prices rise, use your diagram to determine the short run and long run effects on
Vietnam GDP, the price level, and unemployment.

4) Draw the AD-AS diagram for the Vietnam economy starting in a long-run equilibrium.
A boom occurs in USA, use your diagram to determine the short run and long run effects on

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Vietnam GDP, the price level, and unemployment.
Answer the following multiple choice questions:
1) An increase in government purchases shifts the…..curve to the…..
a) aggregate demand; left
b) aggregate demand; right
c) aggregate supply; left
d) aggregate supply; right
2) In the short run, the short-run aggregate supply curve will shift right when
a) the birth rate increases.
b) consumer expenditure rises.
c) the government increases tax rates.
d) a temporary increase in oil refining capacity leads to a widespread reduction in the cost
of production.
3) Consider an economy that is initially at its potential output. Following a (permanent) fall in
investment, in the short run, GDP will….., while the price level will…..
a) fall; fall
b) fall; rise
c) rise; fall
d) rise; rise
4) Following the permanent fall in investment described in the question above, after the initial
changes (analysed in the question 3 above), the aggregate supply curve will…..
a) shift to the left
b) shift to the right
c) remain unchanged
d) none of the above
5) In the long run, following the permanent fall in investment described in question 3, GDP will
be
a) below potential output.
b) above potential output.
c) equal to potential output.
d) none of the above.

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6) Which of the following factor shifts the aggregate demand curve to the left.
a) Government increases spending
b) People prefer to buy domestic produced goods
c) The global demand for exports has diminished
d) All the factors above are correct
7) In the long run, which the following factor will shift the supply curve to the right.
a) Government increases spending
b) Price decreases
c) Demand for imports decreases
d) None of the above are correct
8) In the short run, when the government increases tax, how about the total output and price level
of the economy?
a) Output increases, price decreases
b) Output decreases; price increases
c) Output increases, price increases
d) Output decreases; price decreases
9) In the AS-AD model, when global oil prices rise, and the government employs contractionary
fiscal policy, it will:
a) Output increases, price increases
b) Output decreases; price increases
c) Output decreases and prices are not yet determined
d) Output decreases, price decreases
10) Which of the following can make the short-run aggregate supply curve shifts to the left:
a) Technological advances
b) Price of inputs increases.
c) Price increases
d) All of the above

Chapter 7: Inflation and unemployment

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Exercise
1) Consider the following New Zealand labour market statistics.
March 2015 ’000s of people
Employed: 2,355
Unemployed: 155
Not in the labour force: 1,240
Working age population: 3,750
a) How many people are in the labour force?
b) Calculate the labour force participation rate.
c) Calculate the unemployment rate.
d) Would you expect the unemployment rate for people aged 20-24 years to be higher,
lower or the same as the overall unemployment rate (for all working age people)? Discuss.
2) A country produces only 3 products, 2013 is the base year
Product 2013 2014 2015
P Q P Q P Q
Banana 10 2 12 3 10 2
Orange 20 5 25 4 30 6
Iron 100 10 100 12 120 15
a) Calculate the consumer price index of 2014 and 2015, knowing that the country's
statistical office chooses Banana and Orange as a basket of goods.
b) Calculate the GDP deflator of 2013, 2014 and 2015.
c) Calculate inflation rate in 2014 and 2015.
3) Indicates the following examples are classified as which types of unemployment?
a) Unemployment as a result of the narrowing of the textile industry and expansion of the
computer industry.
b) A person in the job transfer process
c) People who are physically or intellectually obstructed make them unavailable for
employment.
d) Unemployment due to wage is too high compared to labor market.
e) Unemployment when the economy falling into recesstion
4) Suppose that the money supply this year is 500 billion, nominal GDP is 10.000 billion, real
GDP is 5.000 billion
a) Calculate the price level. Calculate the Velocity of money
b) Suppose M and V are unchanged and the output of the economy increases by 5% per

18
year, what is the nominal GDP and price level next year if the central bank wants to keep the
fixed money supply.
c) Assuming that V is constant, how much money should be in next year if the central
bank wants to keep the price stable.
d) How much the money supply should be next year if the central bank wants inflation
10%?
Answer the following multiple choice questions:
1) The employment rate is equal to
a) the number of people employed divided by the number of people participating in the
labour market.
b) the number of people employed divided by the number of people who are of working
age.
c) 1 minus the unemployment rate.
d) the number of people employed divided by the number of people unemployed.
2) Which of the following belong to the workforce:
a) High school students
b) Housewife
c) Discharged Soldiers
d. Final year students
3) The short run Phillips curve illustrated:
a) The positive relationship between inflation and unemployment
b) The positive relationship between interest rates and unemployment
c) The negative relationship between interest rates and unemployment
d) The negative relationship between inflation and unemployment

4) Due to anti-dumping lawsuit, catfish and pangasius export industries have meet many
difficulties. What kind of unemployment is more likely to increase:
a) Structural unemployment
b) Frictional unemployment
c) Cyclical unemployment
d) All of these sentences are wrong

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5) If the CPI of 1995 was 136.5 and the inflation rate of 1995 was 5%, the CPI of 1994 was:
a) 135
b) 125
c) 131.5
d)130

Chapter 8: Foreign exchange market and Balance of payment

Exercise
1) Vietnam's major trading partners are in recession. What can happen to Vietnam's trade balance
and output?
2) How will the following transactions be classified in the accounts of balance of payments of

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Vietnam? Are they put into current account or capital and financial account?
a) An American importer buys a bottle of Dalat wine for $ 500.
b) A Vietnamese worker working for a US company receives monthly salary from
Washington bank and deposits it into ACB bank.
c) A Vietnamese buys bonds from a Singapore company worth $ 10,000.
d) A Vietnamese’s charity fund sends $ 100,000 to Africa to help local residents buy food
after a crop failure.
3) Assume US and Japan are the only two trading countries in the world. What will happen to the
value of USD in the following cases?
a) Japan loosened some restrictions on imports.
b. The United States issues import tariffs on Japanese goods.
c. Interest rates in the US increased sharply.
d. A report shows that Japanese cars have longer lifespan, especially compared to
American cars.
Answer the following multiple choice questions:
1) In the open economy, a decrease in Gross Domestic Product will cause
a) a decrease in imports.
b) an increase in imports.
c) a decrease in imports and an increase in exports.
d) an increase in imports and decrease in government expenditure.
2) If the exchange rate falls from 18,000 VND/USD to 17,500 VND/USD, other factors are the
same
a) Vietnam dong appreciates, imports decrease.
b) Vietnam dong appreciates.
c) Vietnam dong depreciates, imports increase.
d) Vietnam dong depreciates, imports decrease.
3) In the balance of payments, "net transfer" is a component of:
a) Trade Balance
b) Capital and financial account.
c) Official Sponsorship.
d) Current account

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4) Economists predict that the world economy will recover and grow back at the beginning of
2014, what could happen to Vietnam then:
a) Vietnam dong is appreciated
b) Vietnam dong is depreciated
c) Vietnam's export value decreases
d) Value of consumer goods import increased
5) Other factors are constant, when Vietnamese travel abroad less:
a) Supply of foreign currency increases
b) Supply of foreign currency decreases
c) Demand of foreign currency increases
d) Demand of foreign currency decreases
6) When Vietnam's balance of payment surplus, in the floating exchange rate regime, then:
a) the exchange rate balance
b) the exchange rate tends to increase.
c) the exchange rate tends to decrease.
d) the exchange rate will not change.
7) In 2017, Vietnam will invest $10 billion in Myanmar. This will affect:
a) Current account of Vietnam
b) Trade balance of Vietnam
c) Capital and financial account of Vietnam
d) Both a, b, and c are true

8) When China adjusts its RMB appreciation against the USD, the immediate effect is
a) The value of consumer goods imported from the US into China will decrease
b) China trade balance with the US will deficit
c) The US trade balance with China will deficit
d) Vietnam trade balance with the US will surplus
9) Overseas Vietnamese remittances sent to Vietnam will:

22
 a) Increase Vietnam’s current account
b) Increase Vietnam’s financial and capital account
c) Reduce the government budget deficit
d) Both answers b and c are true
10) As the real exchange rate of Vietnam rises, Vietnamese goods become
a) More attractive to consumers in Vietnam and abroad
b) More attractive to consumers in Vietnam and less attractive to consumers abroad
c) Less attractive to consumers in Vietnam and abroad
d) Less attractive to consumers in Vietnam and more attractive to consumers abroad

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