Chepikov M.

Winter 2022/23 гг
MACROECONOMICS
(for «Management» major BBA students)

SAMPLE FINAL TEST (30 minutes)

1. Most economists believe that a repeat of the Great Depression is unlikely in the future. Which of
the following does not give grounds for such statements?
a) the Fed will not allow a significant reduction in the money supply;
b) today, more efforts are being made to have a balanced State budget;
c) widespread bank failures are less likely;
d) the current income tax is a built-in stabilizer today.
2. If government increases unemployment insurance, then one could expect that frictional
unemployment:
a) decreases; c) increases;
b) stays unchanged; d) increases, then decreases.
3. Assume negative supply shock. Central bank decides to compensate shock immediately. What
path of income and prices would be observed in the economy?
a) y: 100, 90, 100 p: 1, 1, 0.9; c) y: 100, 100, 100 p: 1, 1, 1;
b) y: 100, 90, 90 p: 1, 1.2, 1.2; d) y: 100, 100, 100 p: 1, 1.2, 1.2.
4. Suppose, professor has declared date of final exam. When this day has come, professor is tempted
to cancel exam, thinking that students are ready, and he could use the day for additional lectures.
This is:
rational expectations; c) discretionary policy;
a) d) inconsistent policy.
b) adaptive expectations;
5. Based on Keynesian consumption function one could have thought, that economy would
experience secular stagnation after WWII. Why?
a) continuous decrease in marginal propensity to consume would lead to lower saving, investment,
and income growth;
b) continuous decrease in average propensity to consume would lead to lower saving, investment,
and income growth;
c) continuous decrease in marginal propensity to consume would lead to higher saving, lower demand
and lower national income;
d) continuous decrease in average propensity to consume would lead to higher saving, lower demand
and lower national income.
6. If currency to deposits ratio cr is 20 %, reserves to deposits ratio rr is 20 %, and every bank is
lending most of new deposits, then monetary base increase by $1 would increase money supply
by:
a) $1; c) $3;
b) $2; d) $4.
7. Let production function be Y = AF (K, L). Capital share of income is 0.5. If output increases by
4%, labor force increases by 3 %, and capital increases by 2 %, what is Solow residual?
a) 0.5 %; c) 1.5 %;
b) 1.0 %; d) 2.0 %.
8. See following annual inflation and unemployment
Year Inflation Unemployment
1 10 % 5 %
28%6%
34%9%
Part of business cycle in years 1–3 is:
recession; c) stagflation;
a) d) slumpflation.
b) boom;
9. Hysteresis is about long run impact on:
a) inflation expectations;
b) sacrifice ratio;
c) cyclical inflation;
d) natural unemployment.
10. Suppose Keynesian consumption function is: C = K + cY, где K > 0, 0 < c < 1. Marginal
propensity to consume could be represented as:
a) K + c; c) с;
b) K/Y + с/Y; d) K/Y + c.
11. If reserve requirements are 20 %, then bank from each $1 new deposits could lend additionally:
a) $0; c) $0.80;
b) $0.20; d) $1.
12. Marginal product of capital (MPK) is 1/3; marginal product of labor (MPL) is 3. Capital increases
by 30; labor force increases by 10. By how much output would increase?
a) 10; c) 33;
b) 30; d) 40.
13. What would bring real exchange rate depreciation?
a) exogenous increase of foreign demand for domestic goods;
b) exogenous decrease in investment;
c) government spending increase;
d) cut in taxes.
14. Concept, when in the long run economy returns to output and unemployment, defined by classical
model is:
a) natural rate hypothesis; c) rational expectations;
b) hysteresis; d) coordination failure.
15. A downward shift of the savings curve to the left cannot be caused
a) a positive consumption shock;
b) an increase in the state budget deficit;
c) tax reductions;
d) an increase in the real rate of interest.
16. Suppose, government decides to cut taxes to increase consumption and investment. Would it
succeed with both objectives?
17. Why in Solow growth model with capital less than steady-state level economy grows?
18. What is the difference between real ex ante and ex post interest rates?
19. Describe ways how government could change frictional unemployment.
20. Last three decades Belarus has trade deficit. Is it good or bad for the economy?