Final Exam Fall 2022-2023

Date: Thursday, January 05/01/2023.

Course Title: Introduction to Macroeconomics (BCOR 240)
Duration: 2 hours.
Groups: All groups.
Number of pages: 10

INSTRUCTIONS

1. Cell phones, books and notes are strictly not permitted.

2. Only non-scientific (no memory) calculators are permitted.

3. Choose one answer; choosing more than one answer is graded zero.

4. Two marks are awarded for every correct answer.

5. Record your answer on the answer sheet provided in page 10.

Name:-----------------------------------------------------------

ID:---------------------------------------------------------------

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MCQ (50 pts) 5. During a presidential campaign, the
incumbent argues that he should be reelected
because nominal GDP grew by 12 percent
1. When studying changes in the economy during his 4-year term in office. You know
over time, economists want a measure of the that population grew by 4 percent over the
total quantity of goods and services the period and that the GDP deflator increased
economy is producing that is not affected by by 6 percent during the past 4 years. You
changes in the prices of those goods and should conclude that real GDP per person
services. In other words, economists want to
study a. grew by more than 12 percent.
b. grew, but by less than 12 percent.
a. nominal GDP. c. was unchanged.
b. real GDP. d. decreased.
c. the GDP deflator.
d. GNP.
6. The information below for 2008 in
millions was reported by the World Bank.
2. Which of the following is the correct On the basis of this information, which list
formula for the GDP deflator? below contains the correct ordering of GDP
per person from highest to lowest?
a- (real GDP/nominal GDP) x 100
b- (nominal GDP/real GDP) x 100 Country GDP GDP(Current Population
c- (nominal GDP – real GDP)/real GDP) x 100 (Constan US$)
d- (GDP- GDP per person /GDP per person) x 100 t US$)
Ghana 7,690 16,653 23.35
Kenya 17,569 30,354 38.76
3. GDP per person tells us the income and Tanzani 15,394 20,490 41.276
expenditure of the a

a. richest person in the economy. a. Ghana, Kenya, Tanzania

b. poorest person in the economy. b. Ghana, Tanzania, Kenya
c. average person in the economy. c. Kenya, Tanzania, Ghana
d. entire economy. d. Kenya, Ghana, Tanzania

4. Consumption consists of spending by

households on goods and services, with the
exception of

a. purchases of intangible services.

b. purchases of durable goods.
c. purchases of new houses.
d. spending on education.

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7. Last year country A had a nominal GDP
of $600 billion, a GDP deflator of 150 and a
population of 40 million. Country B had a
nominal GDP of $720 billion, a GDP
deflator of 120 and a population of 50
million. From these numbers which country
is likely to have had the higher standard of
living?
a. Country A because it had the higher
nominal GDP per person.
b. Country B because it had the higher
nominal GDP per person.
c. Country A because it had the higher real
GDP per person.
d. Country B because it had the higher real
GDP per person.
8. In the economy of Tajikastan in 2015,
consumption was $3000, exports were
$1200, GDP was $6300, government
purchases were $1300, and investment was
$1500. What were Tajikastan’s imports in
2015?
a- $500
b- - $700
c- $700
d- $500
9. When the consumer price index rises, the
typical family
a. has to spend more dollars to maintain the
same standard of living.
b. can spend fewer dollars to maintain the
same standard of living.
c. finds that its standard of living is not
affected.
d. can offset the effects of rising prices by
saving more.
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10. Which of the following is not correct?
a. The consumer price index gives
economists a way of turning dollar figures
into meaningful measures of purchasing
power.
b. The consumer price index is used to
monitor changes in the cost of living over
time.
c. The consumer price index is used by
economists to measure the inflation rate.
d. The consumer price index is used to
measure the quantity of goods and services
that the economy is producing.
11. The CPI is more commonly used as a
measure of inflation than the GDP deflator is
because
a. the CPI is easier to measure.
b. the CPI is calculated more often than the
GDP deflator is.
c. the CPI better reflects the goods and
services bought by consumers.
d. the GDP deflator cannot be used to gauge
inflation.
12. Suppose the typical household spends
$3,500 on goods and services during the
month of January, and $4,300 on the same
goods and services in February. Using
January as the base period, what is the
consumer price index for February?
a- 151.4
b- 81.4
c- 55.1
d- 122.9
13. If the CPI was 104 in 1967 and is 390 Questions from 16 to 26 are related.
today, then $10 in 1967 purchased the same
amount of goods and services as 16- Consider an economy described by the
following equations:
a- $2.67 purchases today. Y = C + I + G,
b- $37.50 purchases today. Y = 8,000,
c- $39.00 purchases today. G = 900,
b- $104.00 purchases today. T = 1,200,
C = 200 + 0.8 x (Y − T ),
I = 1,800 – 200 x r.
14. The basket of goods in the consumer
price index changes Compute the national saving

a- occasionally, as does the group of goods a- $1260

used to compute the GDP deflator. b- $1460
b- automatically, as does the group of goods c- $1660
used to compute the GDP deflator. d- $1560
c- occasionally, whereas the group of goods
used to compute the GDP deflator changes
automatically. 17- Calculate the equilibrium real interest
d- automatically, whereas the group of rate
goods used to compute the GDP deflator
changes occasionally. a- 1,7
b- 2,7
c- 0,7
15. If the price of Tunisian olives imported d- 1,2
into the United States decreases, then
If the State increases Tax by 10%
a- both the GDP deflator and the consumer
price index will decrease. 18- Compute the national saving
b- neither the GDP deflator nor the
consumer price index will decrease. a- $1556
c- the GDP deflator will decrease, but the b- $1356
consumer price index will not decrease. c- $1756
d- the consumer price index will decrease, d- $1156
but the GDP deflator will not decrease.

19- Calculate the equilibrium real interest

rate (Case A).

a- 0,22
b- 2,22
c- 1,22
d- 3,22

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 25- Calculate the equilibrium real interest
If the State increases G by 10% rate (Case D).

20- Compute the national saving a- 0,18

b- 2,18
a- $1170 c- 3,18
b- $1370 d- 1,18
c- $1570
d- $1770
26- As a consultant, what is the policy you
21- Calculate the equilibrium real interest should recommend to the government?
rate (Case B).
a- Increase T or decrease G
a- 3,15 b- Decrease T or decrease G
b- 2,15 c- Increase T or increase G
c- 1,15 d- Decrease T or increase G
d- 0,15

Questions from 27 to 29 are related.

If the State decreases G by 10%
27- Bank-1 has $320 assets, $230 liabilities
22- Compute the national saving and $90 capital. Bank-2 has $320 assets,
$240 liabilities and $80 capital. Bank-3 has
a- $1350 $320 assets, $200 liabilities and $120
b- $1750 capital. Bank-4 has $320 assets, $270
c- $1550 liabilities and $50 capital.
d- $1150
We suppose the value of assets decrease by
23- Calculate the equilibrium real interest 40% for the Bank1; 30% for the Bank2;
rate (Case C). 20% for the Bank3 and 10% for the Bank4.
Which Bank is said to be the most insolvent
a- 2,25 (or vulnerable)?
b- 3,25
c- 0,25 a- Bank1
d- 1,25 b- Bank2
c- Bank3
d- Bank4
If the State decreases Tax by 10%

24- Compute the national saving 28- Which Bank needs fewer capital
requirements to cover its losses?
a- $1764
b- $1564 a- Bank1
c- $1164 b- Bank2
d- $1364 c- Bank3

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d- Bank4
29- If the Fed wants to increase the 32- Which of the following statements is
monetary base, which bank can be correct?
considered an eligible bank capable of
paying higher interest rate to obtain the a- cd increases, when people prefer saving
largest share of loans? money.
b- cd increases, when people are scared of
a- Bank1 keeping money in banks.
b- Bank2 c- cd increases, when the real interest rate
c- Bank3 for investment is high
d- Bank4 d- cd increases, when the real interest rate
for saving is low.

30- Which of the following statements is

correct? 33- Knowing that rd is equal to 40%, if the
money supply is increased by 20%, by how
a- When there is massive inflation. The Fed much has the monetary base increased?
says they could simply print more money.
b- When there is massive inflation. The Fed a- 50%
says they could simply decrease the real b- 2
interest rate. c- 8%
c- When there is massive inflation. The Fed d- None of these answers
says they could simply sell the securities that
they had earlier bought.
d- When there is massive inflation. The Fed 34- The equation L(i) refer to
says they could simply increase the real
interest rate. a- Transactionary + Saving
b- Speculative
c- Transactionary + b
31- Which of the following statements is d- Saving + b
correct?

a- The Fed can control the actual rd but not

the required minimum rd.
b- The Fed can control both the required
minimum rd and the actual rd.
c- The Fed does not have control over the
required minimum rd or the actual rd.
d- The Fed can control the required
minimum rd but not the actual rd.

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35- According to the doctrine of monetary Questions from 37 to 40 are related.
neutrality,
Md = ( P x Y x i) / L ;
0 Y
= 100000; L0 = 10;
a- The money supply and its growth rate Mg = 70%; Yg= 40%;
have an effect on nominal and real National saving = 1800;
endogenous variables.
I0 = 1500; Ir= 200; Ms=1800000
b- The money supply and its growth rate
have no effect on real and nominal
37- compute the nominal interest rate
endogenous variables.
c- The money supply and its growth rate
a- 1,1
have an effect on the real endogenous
b- 2.2
variables but no effect on the nominal
c- 1,8
endogenous variables.
d- 2,9
d- The money supply and its growth rate
have an effect on the nominal endogenous
variables but no effect on the real
38- Compute the price value
endogenous variables
a- 90
b- 100
36- Which of the following statements is
c- 110
correct?
d- 120
a- The Fisher Effect: whatever affects real
interest rate also has an identical effect on
If money supply increase by $1000 000
the nominal interest rate
b- the Fisher Effect: whatever affects
39- In the short run
inflation also has an identical effect on the
real interest rate
a- Y, P, Π and i changes
c- The Fisher Effect: whatever affects
b- P, Π and i changes
inflation also has an identical effect on the
c- Y, Π and P changes
nominal interest rate
d- Y, P and i changes
d- the Fisher Effect: whatever affects
inflation also has an identical effect on both
40- In the long run
nominal and real interest rate
a- Y, P, Π and i changes
b- P, Π and i changes
c- Y, Π and P changes
d- Y, P and i changes

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 45- The government wants to decrease price.
Questions from 41 to 47 are related. As a consultant, what is your suggestion?

41- The government wants to lower the real a- decrease K

interest rate to increase investment. As a b- decrease T
consultant, what is your suggestion? c- increase L0
d- increase C0
a- decrease K
b- increase I0
c- increase C0 46- The government wants to increase
d- Increase T output in the short run. As a consultant, what
is your suggestion?

42- The government wants to increase a- increases K and L at the same time
saving levels to increase investment. As a b- One factor should be increased, and the
consultant, what is your suggestion? other should be fixed.
c- decrease the real interest rate
a- decrease K d- increase M
b- decrease T
c- decrease G
d- increases M 47- The government wants to decrease
inflation. As a consultant, what is your
suggestion?
43- The government wants to increase
consumption levels to increase production a- decrease T
and investment. As a consultant, what is b- decreases M
your suggestion? c- decrease (Mg − Yg)
d- Decrease G
a- increase M
b- increase G
c- decrease K Questions from 48 to 50 are related.
d- decrease T
48- C = 100 + 0.7x(Y − T),
I = 1800 – 20 x r
44- The government wants to decrease
nominal interest rate to decrease inflation. If the percentage change in the Y is
As a consultant, what is your suggestion? ΔY = 30%. What is the percentage change in
savings?
a- increase G
b- increase I0 a- ΔS = 30%
c- decrease K b- ΔS = 21%
d- increase T c- ΔS = 9%
d- ΔS = 18%

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If the percentage change in the T If the percentage change in the T
is ΔT = 60% is ΔT = 60%

49- What is the percentage change in 50- What is the percentage change in real
savings? interest rate?

a- ΔS = - 42% a- Δr increase by 2,1%

b- ΔS = 42%
b- Δr decrease by 2,1%
c- ΔS = 18%

d- ΔS = - 18% c- ΔT does not have any effect on r

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d- Δr increases by the same percentage as
ΔT (= 60%)

Question1 B
Question2 B
Question3 C
Question4 C
Question5 B
Question6 C
Question7 D
Question8 C
Question9 A
Question10 D
Question11 C
Question12 D
Question13 B
Question14 C
Question15 D
Question16 B
Question17 A
Question18 A
Question19 C
Question20 B
Question21 B
Question22 C
Question23 D
Question24 D
Question25 B
Question26 A
Question27 A
Question28 B
Question29 C
Question30 C
Question31 D
Question32 B
Question33 C
Question34 B
Question35 D
Question36 C
Question37 C
Question38 B
Question39 A
Question40 B
Question41 D
Question42 C
Question43 D
Question44 D
Question45 C
10 Question46 B
Question47 C
Question48 C
Question49 B
Question50 B