上海财经大学 中级宏观经济学期末考试题

4. (10 points) Consider the market-clearing model without capital, and use it to discuss the following question about an agricultural economy. Suppose, because of weather conditions, there is a temporary drought expected to last for a year or two. What are your predictions for the changes in output, consumption, work effort, the real interest rate, and real wages in the short-run? What will happen to the price level? Illustrate your answer with diagrams.
2. (5 points) If the real interest rate increases what happens to desired saving at the household level? If we observe an increase in the real interest, what will happen to aggregate saving? Would your answers be different for the models with and without capital?
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3. (5 points) Between the end of World War II and the mid 1980s, the velocity of money in the United States was rising. What might explain this observation?
10. (10 points) In the Korean war the government increased its purchases of goods and services substantially. A good deal of this increased spending was for military purposes, so I would like you to assume that the direct utility beneÞt of the increase in spending is zero (i.e. α = 0) and that the direct supply effect of the increase in government spending is also zero (i.e. β = 0). Although the Korean War did not last forever, the increase in spending was large enough and long enough lasting that it would have had substantial wealth effects. If the government Þnanced the increase in spending with an increase in lump-sum taxes, what would you predict would have happened to output, the real interest rate, consumption, investment, labor effort and the real wage? Explain your answer with a diagram.
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11. (12 points) The current US administration has made a number of budget proposals. Most prominent among these is a substantial permanent decrease in the tax on dividend income. Since we did not have dividends in our model, I want you to treat the dividend tax as if it is a separate tax on the real net proceeds from investment in capital, i.e. for an investment in one widget of capital the dividend tax is a tax on MP Kt − δ. On the other hand, if a household works harder, and generates more output through the exertion of its labor, it pays the regular income tax on the extra output if produces, i.e. MP Lt . Similarly, the regular income tax rate would apply to interest income. So, if the government cuts the “dividend” tax rate permanently, while leaving the regular income tax rate unchanged, what would you predict would happen to consumption demand and investment demand? How would the equilibrium values of C , I , Y , r, L and w/P change? Assume that at the same time as the government cuts the dividend tax it raises lump-sum taxes so that total tax revenue is unchanged.
1. (5 points) In a diagram, show how people in a Robinson Crusoe economy respond to an increase in the production function that creates a pure wealth effect, but not a substitution effect. What do you have to assume about consumption and leisure to answer this question?
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9. (5 points) In the 1950s and early 1960s a group of East Asian economies (e.g. Japan, Korea, Thailand, Singapore, Malaysia, Taiwan) had much lower per-capita income levels that the industrialized countries in Europe and the US. Now the gap between per-capita income in these countries and per-capita income in Europe and the US has shrunk substantially. What phenomenon does this seem to illustrate? What can explain the fact that all the countries I have mentioned (the East Asian ones, the Europe economies, and the US) have all experienced ongoing growth of per-capita income?
8. (5 points) During recessions, when unemployment is high, governments often make unemployment beneÞts more generous by extending the number of weeks over which the unemployed are allowed to draw unemployment insurance payments. What would you predict would happen to the unemployment rate when the government does this? Why?
Economics 302 Universi3
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7. (10 points) In the current recession, output has fallen, and so have total hours worked and employment, which are both measures of work effort. Consumption has fallen but by much less than output, and investment has fallen by much more than output. Average productivity of labor, Y /L, on the other hand, rose in 2002. For many speciÞcations of the production technology a rise in Y /L implies a rise in MP L. Is the pattern of change in Y , C , I , L and MP L explainable as the result of a permanent or temporary proportional shift of the production technology? Why or why not?
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5. (5 points) Why does the marginal product of labor schedule represent a Þrm’s labor demand curve?
6. (10 points) In the 1980s, the Brazilian government suffered through a Þscal crisis. It wasn’t able to raise enough tax revenue to pay for its expenditure (purchases of goods and services and transfers). It also couldn’t borrow because nobody was willing to lend to it. In this situation what source of Þnancing would the government have been left with? What might you predict would happen to the inßation rate in this circumstance? Would you predict that this Þscal crisis would have real consequences? Would your answer depend on how big the government’s budget shortfall was?