Question

Macroeconomics [ET20291 Academic Year: 2018/2019 11 hune 2019 Last Name. kotwer.. First Nameaig Kof umber 35s [2 points for correct answer, + 0.5 for the comment; 0 for wrong answer; 0.5 for no answer) [10pl 1. 1.1 Select the wrong statement among the followings [al GDP is distributed as income to economic agents. [b] Rent is the part of income paid to land owners. (c] Sales are the part of income paid to capital owners [d) Wages are a part of income. Short comment: 1.2 Select the wrong statement among the followings [al Nominal and real GDP are equal in the base year [bl If inflation is positive, nominal GDP grows faster than real GDP [c] Both real and nominal GDP depend on inflation [d] Real GDP is a better measure of economic activity with respect to Nominal GDP Short comment:- 1.3 Consider a basic goods market model where the propensity to consume is 50% of disposable income. If the government wants to increase output Y by 10 %, public spending should be [a increased by 10 % of Y [b) increased by 5 % of Y [c] increased by 20 % of Y [d] increased by Y Short comment:- 1.5 An increase in the nominal exchange rate: [a] Corresponds to a depreciation of the national currency. [b] Increases imports [c] Increases exports. [d] Improves the balance of payments. Short comment:-

Answer 1

1.1. The wrong statement is c).

1.2. The wrong statement is c). Real GDP does not depend on inflatio. It depends on the base year price and the quantity produced for a given time period.

1.3. The correct answer is option c). Change in public spending = (1/mpc)× change in government spending

= (1/0.5)×10% = 20% of Y

1.5. The correct answer is option a). Nominal exchange rate means the number of units of domestic currency that can buy one unit of foreign currency. So an increase in nominal exchange rate means depreciation of the domestic currency.