University of Las Palmas de Gran Canaria

Department of Applied Economic Analysis

Bachelor's Degree in Business Management and Administration

Diploma in Business Sciences
Bachelor's Degree in Economics

EXAM NOTEBOOK

INTRODUCTION TO MACROECONOMICS

First course
Second semester
Academic year 2002-2003

Professors

Ofelia Betancor Cruz

Pilar Brugos Larumbe
Carmen Rosa Suárez Moreno
 JUNE 2001

1. Which of the following equalities is correct?

a) PmeC + PmeS <1
b) PmaC + PmeS = 1
c) PmaC + PmeS <1
d) PmaC + PmaS = 1

2. In a closed economy without a public sector where the savings function is S = -100 + 0.4Yd, it is produced
an increase in investment of 10 units. Then the income:
a) It will increase by 250 units.
It will decrease by 250 units.
It will increase by 25 units.
It will decrease by 25 units.

3. Indicate the incorrect answer. The production of a country measured by GNP is calculated as:
a) The sum of the gross added values of all national companies.
b) The sum of all produced by national companies except for the production of intermediate goods.
c) The sum of the production of final goods carried out by domestic factors of production.
d) The sum of the final goods production carried out by production factors residing in the country.

4. If this year's CPI is higher than last year's, while maintaining the nominal GNP.
constant, it can be stated:
a) That the real GNP has increased compared to last year.
b) That real GNP has decreased compared to last year.
c) That real GNP has not changed.
d) That the economy is characterized by a deflationary process.

5. Suppose an open economy with a public sector in which there is a desire to increase income. To do this, we
They propose two alternatives: to increase G or to increase TR. Knowing that c = 2/3, what is the increase?
from TR equivalent to an increase of G of 4,000 units so that the same increase is achieved in
rent?
4,000 monetary units
5,000 units
6,000 u.m.
d) None of the above.

6. The Keynesian consumption function:

a) It is a function of disposable income.
b) It aims to represent the aggregated behavior of all consumers.
c) It reflects the fact that individuals consume even when they have no income.
d) Everything above.

7. If for a certain level of production, the aggregate demand is higher than the aggregate supply:
a) Companies will accumulate more inventory than desired.
b) The 45º bisector, for that level of production, will be below the aggregate demand.
c) The 45º bisector, for that level of production, will be above the aggregate demand.
d) Planned investment will be equal to planned savings.

8. The concept of equilibrium in macroeconomics implies:

Satisfaction of all agents involved in the economy.
b) That in the goods market, the full employment income must coincide with the equilibrium income.
c) That there is more supply than demand for money in the money market.
d) None of the above.
9. Indicate the correct statement:
a) RN = C + Ib + G + X - M - Depreciation + Indirect Taxes + Subsidies
b) RD = PNNpm - Indirect taxes - Undistributed profits + Transfers
c) PNNcf = PNNpm - Indirect taxes + Subsidies
d) RD = RN - IRPF - Indirect taxes + Transfers

10. In a closed economy without a public sector where companies do not retain profits and the
depreciation is null:
a) The disposable income of households is affected by the taxes they must pay.
b) There is an exact equivalence between the value of production and the disposable income that reaches the
families.
c) With what they obtain from the sale of production, companiespay the State and families.
d) Both a) and b) are true.

11. In an open economy with a public sector, GDP at market prices is obtained:
a) Summing the rents of the factors.
b) Adding consumption, gross investment, public expenditure, and net exports of imports.
c) Adding consumption, net investment, public spending, and net exports of imports.
d) Adding the value of final goods as they come out of companies and without considering the effect of the
indirect taxes and subsidies.

12. For the investment function I = I0I1we can affirm that:

a) The parameter I0it represents autonomous investment.
b) The parameter I1it captures the sensitivity of the investment to changes in the interest rate.
It is the key link that allows connecting the goods and money markets.
d) Everything above.

13. Indicate the correct definition:

a) Bank money is the money issued by the Central Bank.
b) Commodity money (full content) is that whose value as money coincides with its value as
merchandise.
c) Legal money is that which circulates only within the banking system.
d) Money is that whose value as money coincides with its value as a commodity.

14. In a closed economy with a public sector, aggregate demand is given by the following
expression:
a) DA = Co + Ctr + Io + Go + [ c (1- t) – m]Y
b) DA = Co + Ctr + Io - I1r + Go + c (1- t) Y
c) DA = Co + Ctr + Io - I1r + Go + [ c (1 - t) - m]Y
d) DA = Co + Ctr + Io - I1r + Go + c (1 – t) Yd

15. If a restrictive fiscal policy is combined with a restrictive monetary policy, we can ensure that:
a) The income does not change and the investment increases.
b) The income increases and the investment can increase, decrease, or remain the same.
c) Income decreases and investment increases.
d) Income decreases and investment may increase, decrease, or remain the same.

16. A purchase of public debt in the market by the Central Bank will result in:
a decrease in investment.
b) A decrease in production.
c) A decrease in imports.
d) A shift of the LM to the right.
 PRACTICAL PART

1. Consider an open economy with a public sector whose behavior is determined by the
following equations and values:

C = 100 + 0.8 Yd
I = 250 - 10 r
G = 150 u.m.
TR = 60 u.m.
T = 0.3 Y
X = 77 u.m.
M = 25 + 0.06 Y
OM = 180 u.m.
DM = 0.3 Y - 12 r

a) Determine the equilibrium rent and interest rate, the balance of the Public Sector, the balance of the Sector
Exterior, and the value that the investment takes in equilibrium. Represent graphically. (20%).

b) Recalculate the values of income and equilibrium interest rate if at the same time it decreases
the tax rate and increases public spending. The new tax rate is equal to t' = 0.175 and the new
The level of public spending reaches a value of G' = 310. What policy is this about? Represent graphically.
the goods market, the money market, and investment, so that the changes are reflected.
(20%)

c) Consider again the equilibrium from part a) and now suppose that the marginal propensity to
consumption becomes equal to 0.6. How does the equilibrium change? Graphically represent it using the
IS-LM scheme in such a way that the changes are reflected. (20%).

2) Known the following items of the Central Bank's balance sheet:

Gold and currency reserves: 300,000 monetary units.

Loans to the Public Sector: 400,000 units.
Loans to the Banking System: 200,000 monetary units.
Deposits of commercial banks in the Central Bank: 100,000 monetary units.
Deposits of the Public Sector: 300,000 monetary units.

And knowing that the cash retention coefficient e = 0.2 and that the cash coefficient is l = 0.4.
the money supply
the balance of the Central Bank. (20%)

3) Comment in precise theoretical and graphical terms.

If the Central Bank raises the reserve requirement, investment decreases.

The best option to finance the public deficit is for the Central Bank to make a loan to
State through the issuance of more coins and bills (10%)
 SEPTEMBER 2001
1. If the GDP at market prices is higher than the GDP at factor cost, then:
a) The economy is heavily subsidized, as it receives more subsidies from indirect taxes than
raises.
Indirect taxes are greater than subsidies.
c) The incomes of Spanish residents abroad are higher than the incomes of residents.
foreigners in Spain.
It is an economy where the depreciation of capital is less than the amortizations.

2. If in a given year the real GDP is 1500 and the GDP deflator is 120, then the nominal GDP
es:
1250
b) 1600
2000
d) None of the above.

3. If the marginal propensity to consume is 3/4, an increase in disposable income will cause consumption
increase
4 times the increase in disposable income
3 times the increase in disposable income
c) In greater amount than the disposable income
d) None of the above

4. Indicate the correct statement regarding the investment multiplier in a closed and non
public sector
It is greater than one.
b) It does not have to be greater than one.
c) It is equal to the inverse of the marginal propensity to consume.
It is equal to the quotient of income and investment.

5. In an open economy with a public sector, if the difference between investment and the balance of the sector
the public is less than the savings, then:
a) The external balance must be zero.
b) The external balance must be positive.
c) The external balance must be negative.
d) There is no relationship between the external balance and savings, investment, and the balance of the public sector.

6. What is the value of the spending multiplier in an open economy, without a public sector, if the
The marginal propensity to save is s=0.2 and the marginal propensity to import is m=0.3?
a) 2
b) 0.5
c) 1.5
d) None of the above.

A decrease in the tax rate has the effect that in equilibrium:

a) Increase imports
b) Decrease the interest rate.
c) Decrease savings
Increase the transfers

8. Let's assume that the cash in the hands of the public is 10 monetary units, the bank reserves are 12 monetary units, and the
the reserve coefficient is 10%. The amount of money (money supply) will be:
100
b) 22
c) 120
d) 130
9. Suppose that the Balance of Payments has a surplus that increases gold and foreign exchange reserves.
The equilibrium interest rate:
It will increase.
b) It will decrease.
c) It will not be affected.
d) It will vary indefinitely, depending on the elasticity of investment demand.

10. An increase in the demand for money:

a) It increases investment.
b) Reduce the money supply.
c) Decrease the equilibrium rent.
d) It increases the reserves of commercial banks.

11. Indicate which of the following statements is correct.

a) The money supply increases if the reserve requirement is raised.
b) The money supply decreases if there is a purchase of bonds by the central bank.
c) The money supply expands if the reserve ratio decreases and the central bank buys bonds.
d) The money supply contracts if the central bank lowers the interest rate on loans.
monetary regulation.

12. Indicate which of the following statements is correct.

a) The demand for money is inversely related to the volume of transactions.
b) The demand for money will be greater the higher the volume of transactions and the higher the rate.
of interest.
c) The demand for money will be greater the lower the preference for liquidity.
d) The demand for money increases with the volume of transactions in the economy.

13. In the simultaneous equilibrium model, suppose that public spending increases, then:
a) Income, interest rates, and investment will increase, and the external balance will deteriorate.
b) Income will increase, the external balance will improve, and investment and interest rates will decrease.
c) Income and investment will decrease, interest rates will rise, and the foreign balance will improve.
d) Income and interest rates will increase, investment will decrease, and the external balance will worsen.

14. A worsening of business expectations produces:

an increase in the public deficit.
b) A decrease in the trade balance.
an increase in imports.
An increase in savings.

15. If we consider the markets for goods and money, a contractionary monetary policy usually:
a) The interest rate will increase and investment and equilibrium income will decrease.
b) The interest rate, consumption, and equilibrium income level will increase.
c) The interest rate will decrease, the level of investment and equilibrium income will increase.
d) The interest rate, public spending, the equilibrium income level, and consumption will increase.

16. The crowding-out effect refers to:

a) An expansionary monetary policy increases private investment spending.
An expansionary fiscal policy drives consumer goods producing companies out of the market.
c) An expansionary fiscal policy increases the equilibrium interest rate and reduces investment spending
private.
d) A contractionary monetary policy reduces spending on private investment.
 PRACTICAL PART

1. Consider an economy whose behavior is determined by the following equations and

values:

C = 360 + 0.8 Yd
I = 3.120 - 20 r
G = 1.000 u.m.
Tr = 300 m.u.
T = 0.25 Y
X = 3.000 m.u.
M = 600 + 0.1 Y
OM = 27.880 u.m.
DM = 2Y - 20r

Determine the equilibrium equations, the income and the equilibrium interest rate, the balance of the sector
Public, the balance of the External Sector. Represent graphically. (20%)

b) Suppose now that the marginal propensity to consume is equal to 0.79. Calculate the new
equilibrium. What has happened to the multiplier? Why? Graphically represent the goods market.
the money market and investment, so that the changes are reflected. (20%)

c) Suppose it is desired to achieve full employment income which takes a value of 15,970 monetary units. To do this...
simultaneously resorts to a fiscal policy through public spending and to an increase in the monetary base of
1.980 u.m., with e= 0.4 and l= 0.3. Calculate the necessary variation in public expenditure. What policies are involved?
Does it deal with? Represent graphically using the IS-LM diagram. (20%)

2. We have the following data from the National Accounting, in monetary units, referring to a
determined period of time: (20%)
Net salaries and wages of installments: 1,500
Intereses: 200
Rentals: 100
Dividendos: 300
Undistributed profits: 50
Gross investment: 650
Net investment: 550
Public expenditure: 250
150
Indirect taxes: 300
Subvenciones: 200
PNB at market prices: 2,500
National Income.

3. Determine in precise theoretical and graphical terms if the following statements are true or false.
propositions. (20%)

An increase in the cash ratio raises the equilibrium income.

The lower the marginal propensity to save, the easier it will be to reach full income.
employment.
 DECEMBER 2001

1. The equilibrium in the goods market for a closed economy without a public sector, according to Keynes:
It occurs when the savings desired by households match the investment.
desired by companies.
b) It coincides with the full employment of resources.
c) It is reached when the marginal propensity to save coincides with the marginal propensity to
consumption.
It is reached when the desired public spending coincides with investment.

2. When the cash coefficient increases:

a) The money multiplier increases.
b) The monetary base decreases.
c) The cash in the hands of the public increases.
d) None of the above.

3. Starting from a situation of joint equilibrium in the goods and money market, the combination
of policies that will lead to an increase in private investment will be:
a) Contractionary fiscal policy and expansionary monetary policy.
b) Contractionary fiscal policy and contractionary monetary policy.
c) Expansionary fiscal policy and expansionary monetary policy.
d) Expansionary fiscal policy and contractionary monetary policy.

4. An increase in the tax rate means that:

a) Decrease disposable income, consumption, the interest rate, and increase investment.
b) Decrease disposable income, consumption, increase the interest rate and investment.
c) Increase disposable income, consumption, decrease interest rates, and increase investment.
d) Decrease disposable income, increase consumption, interest rate, and investment.

5. An increase in the marginal propensity to save causes:

a) Increase the slope of the consumption function and the value of the multiplier.
b) Increase the slope of the savings function and the value of the multiplier.
c) Decrease the slope of the consumption function and increase the value of the multiplier.
d) Decrease the slope of the consumption function and reduce the value of the multiplier.

6. Which of the following facts can generate an increase in income?

a) A decrease in autonomous imports.
b) An increase in public spending.
c) An increase in taxes.
d) a) and b) are true

7. The demand for money for the purpose of speculation:

It is an increasing function of the interest rate.
b) It does not depend on the interest rate.
c) It has a direct relationship with the interest rate.
d) None of the above.

If the money supply increases, it will result in:

a) A decrease in imports.
b) An increase in tax revenue.
c) An improvement in the public sector balance.
The b) and c) are correct.
It is known that both an increase in public spending and an increase in transfers
Government actions have multiplier effects on income. Which will have a greater effect on income if
Is public spending and transfers increased by the same amount?
a) Income increases more when public spending increases.
b) Income increases more when transfers increase.
c) Income decreases less when public spending increases.
d) The income decreases less when transfers are increased.

10. Suppose that the GDP is 500 monetary units in the year 1990, the base year. If the GDP deflator for the year 1995
is doubled compared to the base year, while real production increases by 40%, nominal production,
in the year 1995 is equal to:
1400 u.m.
b) 1000 unknown meaning.
2000 units.
d) None of the above

11. For an open economy with a public sector, indicate which of the following relationships
national accounting is correct:
a) Aggregate demand = Consumption + Investment + Public Spending - Taxes.
b) Aggregate demand = Consumption + Net Investment + Public Expenditure
GNP = Consumption + Gross Investment + Public Expenditure + Exports - Imports.
d) GNP = Consumption + Investment + Public Spending - Taxes + Exports - Imports

12. In a closed economy with a public sector, the savings function is:
a) S = -C0(1-c)(1-t)Yd+ (1-c)TR
b) S = -C0(1-c)(1-t)Y + (1-c)TR
c) S = -C0+ s (1-t)Y - s TR
d) S = -C0+ s (1-t)Yd s TR

13. Indicate the incorrect statement.

a) The Balance of Payments is made up of the Current Account Balance and the Balance of
Capitals.
b) The Current Account Balance is made up of the Trade Balance and the Services Balance.
and the Transfer Balance.
c) The Trade Balance is made up of the Banking Movements Balance, the Balance of
Industrial Services and the Balance of Net Positions.
d) The Balance of Payments is an accounting document.

14. In an open economy with a public sector, equilibrium is characterized by the investment being equal to the
savings. This savings includes:
a) The savings of households, the savings of the State or public surplus and savings
outside the trade deficit.
b) The savings of households, the savings of the State or public surplus, and savings
external or trade surplus.
c) The savings of households, the savings of the State or public deficit, and foreign savings.
the trade deficit.
d) The savings of households, the savings of the state or public deficit, and foreign savings
the trade surplus.

15. A deterioration of business expectations leads to:

An increase in the public deficit.
A decrease in the balance of trade.
c) An increase in imports.
an increase in savings.
16.- Indicate which of the following statements is incorrect:

a) The PMeC is less than the PMaC.

b) The sum of the PMaC and PMaS is equal to one.
c)
d) For Keynes, the marginal propensity to consume decreases as income increases.

PRACTICAL PART

1. Consider an economy whose behavior is determined by the following equations and

values:
C = 800 + 0.8 Yd
I = 6.000 - 20 r
G = 4.100 m.s.
Tr = 1.000 u.m.
T = 0.1 Y
X = 7.000 m.u.
M = 600 + 0.12 Y
OM = 25,000 currency units.

DM = 0.6Y - 400r

a) Determine the equilibrium equations, the income and the equilibrium interest rate, the balance of the Sector.
Public, the balance of the Foreign Sector. Represent graphically. (20%)

b) If the tax rate is now t = 0.08, calculate the new equilibrium. What policy is being referred to?
Graphically represent the goods market, the money market, and investment, in such a way that
let the changes be reflected. (25%)

c) If one wants to achieve an income of 44,000 monetary units through a monetary policy, how much must it vary the
monetary offer?. What type of policy has been used? Represent graphically using the scheme
IS-LM. (25%)

2. We have the following data from the National Accounting, in monetary units, referring to a
determined period of time: (20%)
Net salaries and wages of contributions: 140,000
40,000
Alquileres: 30.000
50,000
Undistributed profits: 35,000
Amortizaciones: 27.000
20,000
Indirect taxes: 32,000
Subvenciones: 67.000
10,000

Calculate: a) National Income. b) Disposable Income, c) Gross National Product (GNP) and d) Net National Product (NNP)

At a certain moment, the OM = 14,000 currency units, 'e' = 0.4, and 'l' = 0.3. If the following occur
next accounting movements: (10%)
- Loans to commercial banks decrease by 10 monetary units.
- Credits to the public sector are increased by 150 monetary units.
- The Treasury deposits increase by 100 monetary units.
- The cash of the banks deposited in the Central Bank increases by 40 monetary units.
What is the new OM?
 JUNE 2002
Monetary policy will be more effective in terms of income:
The more sensitive investment and money demand are with respect to the interest rate.
b. The more sensitive the investment is and the less sensitive the demand for money is with respect to
interest rate.
c. The less sensitive investment and money demand are to the interest rate.
d. The less sensitive the investment is and the more sensitive the demand for money is with respect to
interest rate.

The combination of an expansive monetary policy with a contractionary fiscal policy will produce the
following effects:
a decrease in the interest rate and a decrease in investment.
b. A reduction in the interest rate and an increase in investment.
c. An increase in the interest rate and a reduction in investment
An increase in the interest rate and an increase in investment.

3. If at the same time the marginal propensity to consume increases, the tax rate decreases and
the marginal propensity to import also decreases, then:
a. The slope of the aggregate demand increases.
b. The multiplier increases.
c. The rent decreases.
d. Both a) and b) are correct.

4. If exports increase and at the same time autonomous imports decrease, then:
a. National income increases.
b. The Trade Balance improves.
c. Decrease the Trade Balance deficit.
d. All of the above.

5. The monetary liability of the central bank is equal to:

a. The cash in the hands of the public, plus the cash held by banks plus the deposits of the
commercial banks in the Central Bank.
b. The cash in the hands of the public plus bank reserves.
c. The monetary base.
d. All of the above.

6. Indicate the correct answer:

The higher the cash ratio, the greater the money multiplier will be.
b. The money circulating in the economy is made up of legal money and bank money.
c. Money is a real asset.
d. If the Central Bank's balance sheet asset increases because gold and foreign currency reserves increase
We can say that the Central Bank has carried out an expansive monetary policy.

7. If an economy is situated above full employment production, and experiences an increase in the
aggregate demand, it is likely that:
a. Increase the level of production.
b. An inflationary process occurs.
c. Decrease the level of production.
d. None of the above.

8. Indicate the correct answer:

a. The cash coefficient is equal to the quotient between cash and bank reserves.
b. The cash ratio is equal to the ratio of deposits to bank reserves.
c. The cash ratio increases if the reserve requirements that banks have decrease.
that to maintain.
 The money multiplier will increase if the reserve ratio decreases.

9. The marginal propensity to consume is equal to:

a. 1-PmaS
b. It is the derivative of the consumption function.
c. It is the proportion in which consumption increases when disposable income increases.
d. All of the above.

10. In the simultaneous equilibrium model, suppose that public spending is reduced. Indicate which of the
the following statements are incorrect:
a. The equilibrium interest rate will decrease.
b. The demand for money will decrease.
c. The rent is reduced.
d. Income and interest rates increase.

11. If the GNP at current prices in a given year is 150 trillion currency units, and the deflator is
75, then the general level of prices:
a. It has increased by 25% compared to the base year.
It has increased by 50% compared to the base year.
It has decreased by 75% compared to the base year.
It has decreased by 25% compared to the base year.

12. The saving function in an economy with a public sector that includes transfers is
equal to:
a. S = -C0+ (1-c) Tr + (1-c)(1-t)Y
b. S = C0+ (1-c) Tr + (1-c)(1-t)Y
c. S = -C0+ cTr + c(1-t)Y
d. S = C0+ cTr + c(1-t)Y

13. The investment demand function is represented:

a. Rising in the (r,I) plane, if r is measured on the vertical axis and I on the horizontal.
b. Decreasing in the (r,I) plane, with r measured on the vertical axis and I on the horizontal axis.
c. Increasing in the (p,I) plane, if p is measured on the vertical axis and I on the horizontal.
d. Decreasing in the (p,I) plane, if p is measured on the vertical axis and I on the horizontal.

14. According to the models studied in the course, indicate which of the following facts cannot be a cause.
from a rise in interest rates:
An improvement in business expectations.
b. A reduction in savings.
c. An increase in public spending.
d. An increase in the tax rate.

15. Indicate which of the following financial intermediaries cannot create money:
a. The Central Bank
b. The leasing entities
c. The savings boxes
d. Credit cooperatives.

16. The velocity of circulation of money:

a. It is equal to nominal GDP divided by the demand for money
b. It is the rate at which a certain note changes hands in the economy in a given
time period.
c. It is equal to the money supply divided by nominal GDP.
d. It is given by the ratio between the money supply and demand.
 PRACTICAL PART
1. Consider an open economy with a public sector whose behavior is determined by the
following equations and values:

C = 400 + 0.8 Yd
I = 9000 - 250 r
G = 4000 m.u.
TR = 1000 u.m.
T = 0.1 Y
X = 3000 m.u.
M = 200 + 0.12 Y
OM = 23800 u.m.
DM = 0.6 Y - 50 r

a) What are the basic equilibrium equations? What is the value of income and the type of
equilibrium interest? How much are the balances of the Public Sector, the balance of the External Sector and the
investment in equilibrium? Represent graphically. (20%)

b) Recalculate the values of income and equilibrium interest rate if at the same time the
marginal propensity to consume increases to c' = 0.9 and the marginal propensity to import decreases
When m' = 0.01, what happens to income and interest rates? Why? Represent graphically.
the goods market, the money market, and investment, so that the changes are reflected.
(20%)

c) Reconsider the equilibrium from part a). Knowing that e = 0.4 and l = 0.3, and if the events occur
following changes in the balance of the Central Bank:
Increase in gold and foreign currency reserves = 10 u.m.
Decrease in loans to commercial banks = 30 monetary units.
Increase in Public Sector deposits = 40 monetary units.
Decrease in cash held by banks = 60 monetary units.
Determine the new equilibrium and represent the money, investment, and goods markets reflecting the
changes that have occurred. (20%).

2) Consider the following data from the National Accounting of a country, in monetary units,
referring to a specific period of time:

Net wages and salaries: 100,000 currency units.

Interests: 30,000 units.
Rent: 20,000 monetary units.
Dividends: 50,000 monetary units.
Undistributed profits: 10,000 monetary units.
5,000 units
Gross investment: 130,000 monetary units.
Net investment: 100,000 monetary units.
35,000 units.
Indirect taxes: 25,000 monetary units.
Grants: 10,000 monetary units.

Renta Nacional
market.(20%)
3) The European Central Bank aims for price stability as its ultimate goal. What about
What variables act to achieve it? What is the mechanism that links the interest rate and the level?
price increase? (20%)
SEPTEMBER 2002

1. Consider the following data in monetary units of National Accounting referred to a country
for a certain period, and indicate the value that GNP takes at market prices: Consumption = 500;
Inversión bruta = 200; Gasto público = 100; Depreciación = 20; Subvenciones = 50; Impuestos indirectos
= 60, Exportaciones = 100; Importaciones = 80
a) PNBpm = 820 u.m.
b) PNBpm = 810 u.m.
c) PNBpm = 720 units.
d) PNBpm = 840 currency units.

If in a given year the real GDP is 1500 and the GDP deflator is 120, then the nominal GDP
es:
1250
b) 1600
2000
d) None of the above.

If the net investment is negative:

a) Gross investment is greater than depreciation.
b) Net investment matches depreciation.
c) Gross investment is zero or positive.
d) Gross investment will necessarily be equal to net investment.

4. Indicate the incorrect statement:

a) When we have two values of a variable at constant prices, their difference represents the
nominal increase or decrease of that variable.
b) If we calculate the value of consumption for the year 2000 using the prices of that same year, we will have the value
of consumption of 2000 valued at current prices.
c) It is possible that the growth rate of a variable in nominal terms is lower than its rate of
growth in real terms.
d) To express a certain macromagnitude in real terms, we need a reference base year.

5. The average propensity to consume (APC) is:

a) The ratio of the marginal propensity (PMaC) to consume to income.
b) Equal to the difference between consumption and savings divided by income.
c) The ratio between consumption and income increases as income increases according to Keynes.
d) The percentage of income that is allocated to consumption decreases as income increases according to
Keynes.

In an economy, the nominal interest rate of a particular financial asset is 10%, while
that the inflation rate is 12%. This means that:
The real interest rate is 2%.
b) The real interest rate is -12%.
c) The real interest rate is -22%.
d) The real interest rate is -2%.

7. Indicate which of the following answers is correct:

a) The 'unemployment rate' is the percentage of the active population that is unemployed.
b) The "activity rate" is the percentage of the adult population that belongs to the active population.
c) The “activity rate” is the proportion of the adult population of a country that is working or actively looking for work.
work.
d) All answers are correct.
8. Suppose an economy where consumption is given by the function C = 100 + 0.8 Yd. What will be the
savings when the rent is zero?
-100 u.m.
b) 100 micrometers.

c) 0 u.m.
50 units.

9. Indicate which of the following statements is false:

a) In the calculation of National Income, undistributed profits are included in addition to personal income tax (IRPF).
b) In the calculation of National Income, undistributed profits, personal income tax (IRPF), and taxes are included.
indirect.
c) To calculate disposable income from National Income, direct taxes must be subtracted and
undistributed profits and add the transfers.
d) To calculate the GNPmp from the NNPcf, one must add the depreciations and taxes.
indirect costs and subtract the subsidies.

In an open economy with a public sector, if the difference between investment and the balance of the sector
public spending is less than savings, then:
a) The external balance must be zero.
b) The external balance must be positive.
c) The external balance must be negative.
d) There is no relationship between the external balance and savings, investment, and the public sector balance.

11. Indicate which of the following statements is correct.

a) The money supply increases if the reserve ratio is increased.
b) The money supply decreases if there is a purchase of bonds by the central bank.
c) The money supply expands if the reserve ratio decreases and the central bank buys bonds.
d) The money supply contracts if the central bank reduces the interest rate on loans to
commercial banks.

12. If we consider the markets for goods and money, a contractionary monetary policy typically:
a) The interest rate will rise and investment and equilibrium income will decrease.
b) The interest rate, consumption, and equilibrium income level will increase.
c) The interest rate will decrease, and the level of investment and equilibrium income will increase.
d) The interest rate, public spending, the equilibrium income level, and consumption will increase.

13. The demand for money due to speculation:

a) It is a growing function of the interest rate
b) It is a decreasing function of the interest rate
c) It does not depend on the interest rate
d) None of the above

14. When planned savings are greater than planned investment:

a) Production must decrease.
b) The production should not change.
c) Production will increase or decrease depending on the variation of inventories.
d) Production must increase.

15. Indicate the incorrect statement regarding an open economy with a public sector in which the
Investment depends negatively on the interest rate.
a) An increase in the marginal propensity to consume and in public spending raises the interest rate of
balance.
A decrease in the tax rate and the marginal propensity to import increases the interest rate.
of balance.
c) An increase in the tax rate and the marginal propensity to import decreases the interest rate of
balance.
d) None of the above.
16. A change in the money supply has a greater effect on equilibrium income:
a) The more sensitive investment spending is to the interest rate.
b) The smaller the effect of the multiplier.
c) The more sensitive the demand for money is to the interest rate.
d) Both a) and c) are correct.

PRACTICAL PART

1. Consider an open economy with a public sector whose behavior is determined by the
following equations and values:

C = 600 + 0.8 Yd
I = 5500 - 100 r
G = 4500 u.m.
TR = 2000 units.
T = 0.3 Y
X = 3500 units.
M = 200 + 0.06 Y
OM = 59750 currency units.

DM = 2 Y - 50 r

a) Calculate the equilibrium income and interest rate. What is the balance of the Public Sector?
balance of the External Sector and the different components of aggregate demand in equilibrium?
Graphically represent. (15%).

b) Suppose now that the Government decides to increase public spending by 1000 monetary units, what policy is
treat?. Determine the new equilibrium. Graphically represent the goods market, the market of
money and investment, so that the changes are reflected.

c) Now consider that instead of increasing public spending, the Government opts to increase the
transfers also in the same amount of 1000 monetary units. Recalculate the equilibrium situation.
Graphically represent the goods market, the money market, and investment, in such a way that
the changes should be reflected.

d) Compare in terms of income, interest rates, and investment the two previous policies. Explain why.
they have a distinct impact on those variables. (15%)

2. Having knowledge of the following data from the Central Bank's balance sheet:

Gold and currency reserves = 10,000 monetary units.

Loans to commercial banks = 130,000 monetary units.
Deposits of commercial banks in the Central Bank = 10,000 monetary units.
Treasury deposits = 40,000 monetary units.

Monetary Supply
in the power of the banks and d) The balance of the Central Bank.(20%)

3. Analyze in theoretical and precise graphic terms and indicate if it is some policy:

a) A sale of securities by the Central Bank. (10%)

b) A decrease in the marginal propensity to import. (10%)
 DECEMBER 2002

1. If public spending increases and the money supply decreases, private investment is likely to:
a) Increase as income increases.
b) Decrease due to the rise in interest rates.
c) Do not vary because the banking multiplier compensates for the spending multiplier.
d) It varies depending on the value of the spending and banking multipliers, as they play in the direction
opposite.

A drop in interest rates:

a) It favors investment.
b) It increases public spending.
c) The balance of trade worsens.
c) Both a) and c) are correct.

3. If the full employment income is lower than the income that balances the economy, then the fiscal policy
adequate will consist of:
a) Decrease public spending.
b) Decrease transfer spending.
c) Increase the tax rate.
d) All of the above.

4. According to the Keynesian consumption function C = Co + cY, the average propensity to consume:
It decreases as income increases.
b) It coincides with the marginal propensity to consume.
c) It remains constant because it is a linear function.
d) It increases as income increases.

5. If the marginal propensity to consume is 0.5 and then increases to 0.9, then:
a) The slope of the consumption function decreases.
b) The slope of the saving function increases.
c) The slope of the consumption function remains constant.
d) The slope of the savings function decreases and the multiplier increases.

6. If the money demand curve is perfectly elastic to the interest rate, then:
a) By increasing the money supply, investment increases.
b) The tax rate increases.
c) By increasing the money supply, the interest rate remains constant.
d) None of the above.

7. Indicate which of the following National Accounting relationships is incorrect:

a) PNNp.m = PNNc.f + Indirect taxes - subsidies.
b) RN = PNBc.f - depreciations.
c) Available income = Gross National Product per capita - Undistributed benefits - Personal Income Tax + Transfers.
d) PNBp.m – PNNp.m = depreciations.

8. A decrease in the demand for money:

It reduces investment.
b) Reduce the equilibrium rent.
c) It increases consumption.
d) It increases public spending.
9. If business expectations are very good:
a) Household consumption decreases.
b) The external sector balance improves.
c) Savings increase as income increases.
d) The balance of the public sector worsens.

10. If public spending increases and taxes decrease simultaneously, the result will be:
an increase in income, interest, and a decrease in investment.
b) A simultaneous shift and rotation of aggregate demand upward.
c) An increase in income, interest, and investment.
The a) and b) are correct.

11. Indicate the correct answer:

a) Bank money is not part of the money supply.
b) The monetary multiplier will be greater the lower the cash retention coefficient 'e' is.
c) If commercial banks decide to lend less money, the money supply will not be affected.
d) Legal money is the money issued by commercial banks.

12. People who are dedicated solely to domestic chores without seeking employment are
considered:
Active population.
b) Stopped.
c) Inactive population.
d) Marginal assets.

13. In the simple model, where the State and the external sector are not included and investment is
autonomous, the slope of the aggregate demand curve coincides with:
a) The marginal propensity to invest.
b) The marginal propensity to consume.
c) The bisector of the first quadrant.
d) Consumption and income.

14. For an open economy with a public sector, indicate the correct statement:
a) As investment decreases, the equilibrium level of production will increase.
b) As savings increase, the equilibrium income level will rise.
c) The multiplier must be less than one.
d) The balance of the public sector will depend on the level of income.

15. The velocity of circulation of money:

It is equal to nominal GDP divided by the money demand.
b) It is the rate at which a certain bill changes hands in the economy at a certain
time period.
It is equal to the money supply divided by the nominal GDP.
d) It is given by the ratio of money supply to money demand.

16. If in a given year the real GDP is 1500 and the GDP deflator is 120, then the nominal GDP

1250
b) 1600
c) 2000
d) None of the above.
 PRACTICAL PART
1. The data of an open economy with a public sector according to National Accounting are:

Consumption: C = 500 + 0.8Yd Transfers: TR = 800 units.

Investment: I = 11500 - 100r Exports: X = 1720 u.m.
Taxes: T = 0.1 Y Imports: M = 60 + 0.12Y
Public Spending: G = 5000 units.

Money demand: DM = 0.2Y - 20r

Money offer: OM = 9300 u.m.

a) Determine the equilibrium income and interest rate, the equilibrium value of investment, the balance.
of the public sector and the balance of the external sector. Represent them graphically. (20%)

b) If the full employment income is 47250 monetary units, quantify the monetary policy that should be followed.
to reach it. What policy is it about? Graphically represent the money market, investment, and the
goods market, so that changes are reflected. (20%)

c) Reconsider the equilibrium from subsection a). Now the Government decides to raise the rate.
Impositive, which becomes t' = 0.11. Calculate the effect of this policy on income and the interest rate.
Graphically represent that measure in such a way that the changes that occurred are reflected in the
markets of goods, money, and investment. (20%)

2) Consider the following data from the National Accounting of a country, in monetary units,
referred to a certain period of time:

Net salaries and wages: 200 units.

Interest: 120 u.m.
Rent: 40 units.
100 monetary units
Undistributed profits: 20 u.m.
Transfers: 10 units.
Gross investment: 260 monetary units.
Net investment: 200 monetary units.
IRPF: 70 u.m.
Indirect taxes: 50 monetary units.
Subsidies: 20 units.

National Income.
market.(20%)

3) Let's assume that in a banking system with legal reserves of 10%, a new
deposit of 50000 monetary units. According to this, and considering that there is no cash retention in hands of the
Public, what will be the process of expansion of bank deposits in the entire system?
Use the example of successive deposits in various banks.
 TEST TYPE SOLUTIONS

September December September December

Questions June 2001 June 2002
2001 2001 2002 2002
1 D B A B A B
2 C D D B D D
3 D D A D C D
4 B A A D A A
5 C B D D D D
6 D A D B D C
7 B A D B D C
8 A D D D A C
9 C B A D B C
10 B C A D B D
11 B C C D C B
12 D D B A A C
13 B D C B B B
14 B A A D A D
15 D A A B D B
16 D C A B A D