1. General Macro
In what year were Tenzing Norgay and Sir Edmund Hillary the first to summit Mt. Everest?
a) 1948
b) 1951
c) 1953
d) 1956
Answer: c) 1953
Which of the following would you NOT adjust for when calculating the Structural Budget Balance?
a) Asset Prices
b) Commodity Prices
c) Discretionary policy measures
d) Business Cycle
Answer: c) Discretionary policy measures
Which of the following statements about policies to address persistent macroeconomic imbalances is correct?
a) A fiscal contraction and an exchange rate depreciation can both help reduce inflationary pressures
b) A fiscal contraction and an exchange rate depreciation can both help reduce an external deficit
c) A fiscal expansion and an exchange rate depreciation can both help reduce an external deficit
d) A fiscal expansion and an exchange rate depreciation can both help reduce inflationary pressures
Answer: b) A fiscal contraction and an exchange rate depreciation can both help reduce an external deficit
If the government deficit is 3% of GDP and the private savings-investment gap is 2%, what is the current account balance?
a) -5%
b) +5%
c) -1%
d) +1%
Answer: a) -5%
As of March 2025, how many moons does Saturn have?
a) 274
b) 247
c) 168
d) 186
Answer: a) 274
In the Cobb-Douglas production function Y=A*K^α 〖*L〗^(1-α), what does the α parameter represent under the assumption of perfect competition?
a) The total factor productivity (TFP) growth rate
b) The elasticity of output with respect to labor
c) The share of national income that accrues to capital
d) The rate of net capital accumulation over time
Answer: c) The share of national income that accrues to capital
What combination of measures creates a deficit bias?
a) Pro cyclical in good times and bad times
b) Counter cyclical in good times and bad times
c) Pro cyclical in good times and counter cyclical in bad times
d) Counter cyclical in good times and pro cyclical in bad times
Answer: a) Pro cyclical in good times and bad times
What is a key challenge that high and volatile inflation poses for monetary policy?
a) It makes central bank communication clearer
b) It reduces effectiveness as expectations may become unanchored
c) It lowers borrowing costs
d) It prevents wage–price spirals
Answer: b) It reduces effectiveness as expectations may become unanchored
What happens when net capital inflows exceed the current account deficit?
a) Foreign reserves increase
b) Currency depreciates
c) Government borrows abroad
d) Prices increase
Answer: a) Foreign reserves increase
High inflation effect on debt?
a) Debt/GDP decreases
b) Debt/GDP increases due to financing conditions
c) Debt/GDP increases due to dilution
d) Debt/GDP increases short run
Answer: b) Debt/GDP increases due to financing conditions
According to the Phillips Curve, which three factors are the primary determinants of current inflation?
a) Money supply growth, velocity of money, and total output
b) Past inflation, expected future inflation, and real marginal costs (economic slack)
c) Unemployment rates, interest rates, and trade balances
d) Exchange rate movements, commodity prices, and fiscal dominance
Answer: b) Past inflation, expected future inflation, and real marginal costs (economic slack)
Which of the following public expenditure items is not discretionary?
a) Interest payments
b) Public sector wage bill
c) Telecommunication services
d) Transport and travel
Answer: a) Interest payments
According to the Impossible Trinity, which two objectives can a country achieve simultaneously with a fixed exchange rate?
a) Independent monetary policy and full capital mobility
b) Full capital mobility and inflation targeting
c) Full capital mobility or independent monetary policy, but not both
d) A flexible exchange rate and a currency board
Answer: c) Full capital mobility or independent monetary policy, but not both
How many elements are in the periodic table?
a) 105
b) 112
c) 118
d) 121
Answer: c) 118
Given debt 60%, r=6%, g=5%, primary balance -4%, what happens?
a) Explodes
b) Stable
c) Stabilizes higher
d) Goes to zero
Answer: a) Explodes
If an economy is characterized by a negative output gap, weak labor market conditions, and inflation concentrated in energy and food sectors, it is most likely experiencing:
a) Cost-push inflation driven by external supply shocks
b) Demand-pull inflation resulting from an overheated domestic economy
c) A wage-price spiral anchored by high inflation expectations
d) Monetarist inflation caused by excessive growth in the money supply
Answer: a) Cost-push inflation driven by external supply shocks
In which of these years was fiscal policy NOT counter cyclical?
*Refer to picture
a) 2013
b) 2016
c) 2020
d) 2022
Answer: a) 2013
Which country has the most time zones?
a) Russia
b) China
c) Canada
d) France
Answer: d) France
What is the REER movement if foreign inflation exceeds domestic by 3% and nominal depreciation is 4%?
a) Appreciate by 1%
b) Depreciate by 1%
c) Appreciate by 7%
d) Depreciate by 7%
Answer: b) Depreciate by 1%
Which is NOT part of debt sustainability?
a) Low rollover risk
b) No implausible policies
c) No increase in debt ratio
d) No restructuring
Answer: c) No increase in debt ratio
What could explain the difference between the Consumer Price Index (CPI) and the GDP Deflator?
a) CPI includes only domestically produced goods, while the GDP deflator includes imports
b) CPI and the GDP deflator use identical baskets but different base years
c) CPI includes imported goods and uses a fixed basket, while the GDP deflator reflects prices of all domestically produced goods and services with a changing basket
d) The GDP deflator only measures services, while CPI only measures goods
Answer: c) CPI includes imported goods and uses a fixed basket, while the GDP deflator reflects prices of all domestically produced goods and services with a changing basket
The first African movie to win an Oscar was from which country?
a) Egypt
b) Morocco
c) Tunisia
d) Algeria
Answer: d) Algeria
Under modified UIP, why might domestic interest rates exceed foreign rates even if exchange rate is stable?
a) Capital flows restricted
b) Investors require a country risk premium
c) Exchange rate fixed
d) Money velocity constant
Answer: b) Investors require a country risk premium
External balance means the current account:
a) Can be sustained by capital flows
b) Must be zero
c) Must be positive
d) Only financed by reserves
Answer: a) Can be sustained by capital flows
External debt stabilizing CA balance?
a) -3.2%
b) -1.9%
c) 2.1%
d) 5.4%
Answer: b) -1.9%