Real
FISCAL
MONETARY
External
General
100

Use of intermediate goods in the production process are excluded from the calculation of value-added:

  1. They represent goods that have not been produced.

  2. Their inclusion would understate GDP.

  3. Their inclusion would overstate GDP.

  4. Their market value is impossible to measure.










Their inclusion would overstate GDP.

100

To stimulate aggregate demand, the government should:

  1. Increase Taxes.

  2. Sell more government bonds.

  3. Either cut taxes or increase government spending.

  4. Run a non-resource primary surplus.

Either cut taxes or increase government spending.

100

According to the Taylor Principle, and holding all else constant, what should the monetary authorities do if the inflation rate rises by 1%?

  1. Lower the policy interest rate by less than one percent

  2. Raise the policy interest rate by less than one percent

  3. Lower the policy interest rate by more than one percent

  4. Raise the policy interest rate by more than one percent



  1. Raise the policy interest rate by more than one percent 
100

A surplus on the external current account means:

  1. The country is a net lender to the rest of the world.

  2. The trade balance is in surplus.

  3. The general government budget is in surplus.

  4. The domestic currency will appreciate.

The country is a net lender to the rest of the world.

100

Which of the following factors is likely to make the economy less vulnerable to external shocks?

  1. More foreign financing 
  2. Longer maturity of external debt
  3. Higher ratio of broad money to GDP
  4. Higher concentration of exports




Longer maturity of external debt

200

Which of the following statements are true in most economies?

  1. Consumption is a larger and more stable component of GDP than investment.

  2. Investment is a larger and more stable component of GDP than consumption.

  3. Consumption is a function of disposable income, therefore it is highly volatile.

  4. Investment, also called fixed investment to distinguish it from inventory investment, is a stable component of GDP.

1. Consumption is a larger and more stable component of GDP than investment.

200

Which of the following is NOT an example of an automatic stabilizer?

  1. As the unemployment rate increases during an economic downturn, unemployment insurance payments increase.

  2. In response to a recession, parliament enacts lower income tax rates and increased tax exemptions for married couples.

  3. As people earn higher incomes during an economic expansion, they pay higher taxes owing to the progressive tax system.

  4. Owing to a fall in the prices of agricultural goods on world markets, a Price Stabilization Fund makes increased payments to domestic farmers.

In response to a recession, parliament enacts lower income tax rates and increased tax exemptions for married couples.

200

Which of these is not a nominal anchor of Monetary Policy?

  1. Inflation target
  2. International Reserves
  3. Exchange rate peg
  4. Money growth

International Reserves

200

Which Austrian physicist is known for his contributions to quantum mechanics and for the famous thought experiment involving a common house pet?

1. Niels Bohr 

2. Werner Heisenberg 

3. Erwin Schrödinger 

4. Max Planck 


3. Erwin Schrödinger

200

Which of the following constitutes a structural reform policy?

  1. Reducing the wage bill through a temporary hiring freeze

  2. Reducing the policy interest rate to promote private investment

  3. Reducing import tax rates to decrease production prices

  4. Reducing barriers to entry to promote more competition in domestic markets

Reducing barriers to entry to promote more competition in domestic markets

300

Empress Elisabeth of Austria, also known as "Sisi," was the wife of Emperor Franz Joseph I. Which event marked the end of her life?

1. She died in childbirth

2. She was killed by in riding accident with Lipizzaner horses

3. She drowned by revolutionaries in the Danube River

4. She was stabbed with a homemade knife 



4. She was stabbed with a homemade knife

300

The cyclically-adjusted fiscal balance captures changes in fiscal policy that are…

  1. Related to the effects of the economic cycle on the budget
  2. Not related to the effects of the economic cycle on the budget
  3. Related to the effects of GDP growth on the budget
  4. Not related to the effects of GDP growth on the budget

Not related to the effects of the economic cycle on the budget

300

Which composer, known for the expressiveness of his symphonies despite having a disability and being a crucial figure in the transition between the Classical and Romantic eras, spent a significant part of his career in Vienna?

1. Joseph Haydn
2. Ludwig van Beethoven
3. Wolfgang Mozart
4. Johannes Brahms

 2. Ludwig van Beethoven

300

Which of the following would NOT increase the surplus on the current account (holding other things constant)?

  1. A rise in domestic saving.

  2. A rise in national income holding domestic absorption constant.

  3. A rise in government infrastructure spending.

  4. An increase in transfers from abroad.

A rise in government infrastructure spending.

300

Suppose the initial debt-to-GDP ratio is 50 percent; the real interest rate is 8 percent; the real growth rate is 4 percent, and the primary surplus-to-GDP ratio is 1 percent. What will happen to the debt-to-GDP ratio over time?

  1. It will explode

  2. It will stay at 50 percent.
  3. It will shrink.
  4. It will increase but then stabilize at a value above 50 percent.

  5. A rise in government infrastructure
    spending.

  6. An increase in transfers from abroad.

It will explode

400

What is a key difference between the CPI and GDP Deflator?          

  1. The CPI is a measure of inflation while the GDP Deflator is a measure of volumes

  2. Only the calculation of CPI uses weights

  3. The GDP Deflator includes only domestic goods while the CPI incorporates imported goods

  4. The economic business cycles will have an affect only on CPI and not on the GDP Deflator

The GDP Deflator includes only domestic goods while the CPI incorporates imported goods

400

There are a number of ways that governments can finance a fiscal deficit. Which one would most likely lead to the crowding out of the private sector?

  1. Borrowing from the central bank

  2. Borrowing from international financial institutions

  3. Issuing domestic public debt

  4. Accumulating public wage arrears

Issuing domestic public debt

400

What is a key difference between the Taylor rule and inflation targeting?

  1. The choice of inflation
  2. Expected inflation
  3. Explicit inclusion of the output gap in the formula   
  4. Adjustment of the business cycle            

Explicit inclusion of the output gap in the formula   

400

Which 2 will promote an appreciation of the real exchange rate of the home country (other things constant)?

  1. Inflation at home is higher than inflation abroad.

  2. Inflation abroad is higher than inflation at home.

  3. A unit of foreign currency buys more domestic currency.

  4. A unit of foreign currency buys less domestic currency.



(1) Inflation at home is higher than inflation abroad.

(4) A unit of foreign currency buys less domestic currency.

400

A country’s initial public debt/GDP ratio is 60 percent. Assume that its annual real interest rate equals 4.0 percent, and real GDP growth rate equals 3.0 percent. All else being equal, what primary balance as a percentage of GDP should the country achieve to keep the debt ratio stable? (Round your answer to one decimal point)

1. -0.6%

2. 0.0%

3. 0.6%

4. 1.8%


3. 0.6 %

500

If GDP growth is 10%, employment growth is 2%, growth in the physical capital stock is 4%, and the share of labor income is 0.5, what is the contribution of TFP to GDP growth (according to the Solow Decomposition)?

  1. 0%

  2. 10%

  3. 7%

  4. 2.5%

7%

500

Look at the chart below, which of the following best describes fiscal policy in LaLa Land during 2014 to 2016?

  1. Expansionary policy stance and procyclical policy
  2. Neutral policy stance and acyclical policy
  3. Expansionary policy stance and countercyclical policy
  4. Contractionary policy stance and procyclical policy

Contractionary policy stance and procyclical policy

500

According to the impossible trinity, what would be one of the implications of a high degree of international capital mobility?

  1. Countries must choose between monetary independence and a fixed exchange rate

  2. Monetary policy is ineffective under a flexible exchange rate arrangement

  3. Countries must adopt capital controls if they want to control inflation

  4. The most effective monetary policy frameworks to bring inflation down and keep it low are monetary aggregate targeting and inflation targeting

Countries must choose between monetary independence and a fixed exchange rate

500

If domestic inflation is 8%, the weighted average of foreign partners’ inflation is 3%, and the nominal effective exchange rate of the local currency depreciates by 6%, by how much, and in which direction, will the real effective exchange rate change?

  1. Appreciate by 6%

  2. Depreciate by 6%

  3. Appreciate by 1%

  4. Depreciate by 1%

Depreciate by 1%

500

A country has a current account deficit of the balance of payment of 1% of GDP. Knowing that public sector saving rate is 3% of GDP and public investment rate is 7% of GDP, what is the saving-investment balance of the private sector?

  1. 0.3% of GDP
  2. 3% of GDP
  3. 4% of GDP
  4. 6% of GDP






3% of GDP

M
e
n
u