Macroeconomics_exam_20090630_XiaoLiping[]武汉大学宏观经济学试卷

武汉大学2008-2009学年第二学期期末考试

经济与管理学院 2008级 2009年6月30日

宏观经济学（A卷）

Principles of Macroeconomics (Paper A)

Instructions: You have two hours to complete the test. Full marks are 100 points. Write your answers on the answer sheet. You can answer your questions either in English or Chinese. Read the questions carefully before answering them. Be precise and to the point.Good luck!

Problem 1 (10 points)

True or False? Explain your answer completely but briefly.

a.James Bond is about to retire and is thinking of selling his car. He spends £1,000

in repairing and tuning the engine, and finally agrees to sell it to Miss Money

Penny for £10,000. As a result, GDP increases by £11,000.

b.Robinson Crusoe will live better by catching fish, if he has more physical capital,

human capital, natural resources and technological knowledge.

c.It is one case of moral hazard that a patient is more likely to apply for health

insurance than healthy men.

d.According to the theory of efficiency wages, firms who pay wages at the

equilibrium level will operate more efficiently.

e.The introduction of ATM machines has made it easier to withdraw cash from

checking accounts. As a result, the Central Bank now has to buy more bonds in the market every time it wants to increase the stock of money in the economy by a certain amount.

Problem 2 (10 points)

Suppose there is a small farming economy. It produces some corn and imports 7 bushels of corn. Of these, 80 bushels are consumed, 10 go for government purchases to feed the army, and 6 go into domestic investment as increases in inventories, 11 bushels are exported. In addition, taxes are 12 bushels.

a.What is the GDP of the economy?

b.Calculate private saving, public saving and net capital outflow. Then explain the

relationship between saving and investment.

c.Assuming in the economy, women have worked more hours in producing corn.

How would this affect GDP? Explain the paradox, “When a person marries his or her gardener, GDP goes down.” Do you think GDP is a good measure of national accounts?

Problem 3 (10 points)

Below are some data about Pizza and Latte.

pute the GDP deflator for each year, using 2006 as the base year.

b.Suppose that the base year for the CPI is 2006. If the CPI basket consists of 400

pieces of pizza and 1000 cups of latte during the three years, compute the CPI for each year. What is the CPI inflation rate from 2007 to 2008?

c.According to your computation, what is the difference between GDP deflator and

CPI?

Problem 4 (15 points)

The Federal Reserve conducts a $20 million open-market purchase of government bonds. The required reserve ratio is 10 percent.

a.What is the money multiplier? How can this purchase affect money supply? What

is the largest possible effect? What is the smallest possible effect? Explain.

b.Show the effects of this purchase in a diagram of money supply and money

demand. What happpen to value of money and price level)?

c.Can you find roles of commercial banks and individual depositors in the creation

of money in terms of multiplier formula?

Problem 5 (10 points)

Suppose Japanese decided they no longer wanted to buy U.S. assets as before. Using a three-panel diagram used in textbook for open economy, show the following effects

of the change.

a.What would happen in U.S. market for loanable funds? In particular, what would

happen to U.S. Interest rates, U.S. saving, and U.S. investment?

b.What would happen in the market for foreign-currency exchange? In particular,

what would happen to the value of the dollar and the U.S. trade balance?

Problem 6 (15 points)