1.

GDP excludes value of intermediate goods and includes the value of

inventory.
2. Economic growth rate tends to decline overtime due to the law of
diminishing returns.
3. Price of bond in third year = $800(interest paid in fourth year)/(1+10%) +
$10800(interest and principal paid in fifth year)/(1+10%)2 = $9652
4. Unemployed due to minimum wage law: low-skilled labor, inexperience
(youth labor), female
5. Real GDP 2020 = $12000*17+$950*480= $660000
Real GDP 2021 =$12000*18+$950*520= $710000
Economic growth rate 2021 = (71-66)/66*100%= 7,6%
6. Nominal GDP in 2021 = $15000*18+$1100*520= $842000
GDP deflator in 2021 = 118
GDP deflator in 2020 = 100 (base year)
Growth of overall price in 2021 = (118-100)/100*100%= 18%
7. Growth rate of nominal income in 2021 = (11-10)/10*100%=10%
Growth rate of real income = 10%-inflation rate 2021 = 10%-18% =-8%
8. Actual inflation rate higher than expected inflation rate => Actual real
interest rate is smaller than expected real interest rate => borrowers are
unexpectedly better-off
9. GDP deflator includes consumption and non-consumption domestic
goods and services while CPI includes consumption domestic goods and
services and consumption goods and services imported. So, if prices of
non-consumption domestic goods (such as machines) rise, then GDP
deflator would rise more than CPI.
10.Export-orientation strategy encourages each nation to develop most
efficient industries, and it is good for long-term economic growth.
 Midterm 2
1. Money multiplier = 1/reserve ratio = 1/20%=5, monetary base =
100*500.000 = 50 mil VND => Money supply = 50 mil * 5 = 250 mil
VND
Central Bank buys 5 mil government bond => monetary base rises by 5
mil VND => money supply rises by 5 mil *money multiplier = 5 mil*5 =
25 mil VND
Currency = Deposit; Currency + Reserve = Monetary Base = 50 mil,
Reserve/Deposit = 0,2. Three variables (Currency, Deposit, Reserve) and
three equations , solve it and we get Currency = Deposit = 41,67 mil, and
Reserve = 8,33 mil. So money supply = Currency + Deposit =
41,67+41,67= 83,34 mil, and money multiplier = 83,34/50 = 1,67
2. The stock market booms => Consumption increases => AD increases =>
output and price rise, unemployment reduces.
Removes tax on imported materials => price of materials go down =>
cost of production goes down => Short run AS curve shifts downward =>
price reduces, output rises, and unemployment reduces.
3. To reduce price level, government must reduces AD, so it has to
implement tighten monetary policy, so Central Bank has to raise discount
rate
Delta Y = Delta G * (1/(1-MPC)) => 100 = Delta G *1/(1-0,5)) => Delta
G = 50. So government must raise its spending by $50. If we take the
crowding out effect into account, then investment spending will reduce
due to an increase in interest rate in response to a rise in government
spending. So government must raise its spending more to offset for the
decline in investment spending due to the crowding out effect.
4. VN exports less to China => supply of yuan will reduce => VND will
depreciate with respect to yuan (supply of yuan curve shifts leftward)
Higher interest rate of yuan => demand for yuan interest-bearing assets
higher => demand for yuan increases => demand of yuan curve shifts
rightward => VND will depreciate against yuan.