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5101
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Economics
Date
Jun 26, 2024
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Q1.
Which of the following best describes the operation of automatic stabilisers?
Select one:
A. When saving increases, investment increases
B. When consumption falls, exports increase.
C. Some components of government spending automatically increases when output falls.
D. When consumption falls, investment increases
E. The economy always tends toward full employment
Q2.
Suppose that there is an increase in oil price. Which of the following is true?
Select one:
A. All the listed answers are correct.
B. This will lead to a downward shift of the price-setting curve where prices will rise, real wages will fall
C. This is a supply shock and it will shift the Phillips curve
D. This will result in a positive bargaining gap.
E. This will result in higher inflation.
Q3.
An increase in the policy rate reduces aggregate demand because,
Select one:
A. lt depresses asset prices and makes people feel less wealthy.
B. lt reduces the size of the multiplier.
C. lt lowers the value of the domestic currency in terms of overseas currencies, encouraging an increasein net exports.
D None of the listed answers is correct.
E. lt increases the income earned by savers
Q4.
Assume that the central bank has an inflation target of 2% per year but
inflation is currently running at 4%. The nominal policy (interest) rate is
currently 5%. The central bank needs to create a negative bargaining gap and
estimates that the real policy rate required to achieve this is 3%.
Consequently it needs to set the nominal policy rate at:
Select one:
A. 7%.
B. None of the answers listed is correct
C. 6% D. 8%
E. 4%
Q5.
Q6.
Q7.
Suppose that some of the immigrants to the country decide to set up
businesses, rather than become employees. in this scenario we expect the
number of firms in the economy would increase and this would raise the level
of competition. The mark up, which depends on the level of competition,
would ____.This will shift the price-setting curve ____and ____ the equilibrium
real wage.
Select one:
a.
decrease, up decrease
b.
decrease, down, decrease
c.
increase, up, decrease
d.
decrease up, increase
e.
increase, down, increase
Q8.
A fatter aggregate consumption function, if plotted on a graph with output on
the horizontal axis and aggregate consumption on the vertical axis, would
indicate which of the following.
Select one.
A. A larger marginal propensity to consume and a smaller multiplier!
B .A smaller marginal propensity to consume and a smaller multiplier.
C. A larger marginal propensity to consume and a larger multiplier
D .None of the listed answers is correct
E. A smaller marginal propensity to consume and a larger multiplier
Q9.
Which one of the following is correct?
Select one:
A. In the recession, the best thing the government can do is to reduce the
government expenditure in order to keep the balance
B. Government expenditure does not induce a multiplier effect because it's
independent to the rest of the economy
C. Focusing on the demand side, there is some way to maintain the
government balance while stimulating economy
D. None of the listed statements is correct
E. The debt-GDP ratio should be kept 0 in order to keep the government's
credibility
Q10.
A worker's best response function depicts effort per hour (e) as a function of
hourly wage (w). lf we plot e in the vertical axis and w in the horizontal axis
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Related Questions
Sally wants to take out her entire savings from her superannuation to spend today. Is this acting in a time inconsistent manner (according to behavioural economics)?
a) Yes b) No
Explain:
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I need clarification on what a "numerical solution" should be in the context of my economic question. Is it simply a number or numerical value, or is it a formula?
I'm not looking for the answer to this problem. I am just making sure i understand the question.
See attached.
arrow_forward
The introduction of new a technology in an economy implies:
what happens when the market is pessimistic
in its expectations about the future economy?
arrow_forward
Please note that the bold red and blue lines below demonstrate the quantity versus price relationship for
supply and demand in normal circumstances for a particular product.
Note: The horizontal axis is quantity, and the Vertical axis is price.
2900
2800
2700
2600
2500
2400
2300
2200
2100
2000
1900
1800
1700
1600
1500
1400
1300
1200
1100
1000
900
800
700
600
500
400
300
200
100
0
-Curve A -Curve B
0
Supply and Demand Curves:
→→ Curve C
5 10 15 20 25 30 35 40
--Curve D ---Curve E -Curve F
45 50
55 60 65 70 75 80 85 90
95 100 105
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Comment, on the likely outcome with sufficient arguments?
a) Impact on GDP when, Interest rates have come down in the countryb) Impact on balance of payment, when there is a huge demand of vaccines produced in India in South Africa.c) Inflation rate in India reaches negative 2% (-2%)d) The aggregate demand falls short of aggregate supply in the economy
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Please only solve parts a, b, and c of this introductory economics question!
arrow_forward
Please Solve Fast All Part I give Good Feedback and Upvote.
Thank you.
arrow_forward
The purpose is to know if you can define each concept through a clear and precise explanation. Imagine that you are going to explain each term to someone who does not know anything about macroeconomics; With this in mind, the explanation should be as clear and simple as possible (not brief). Write a minimum of three sentences per term.1. investment demand2. surplus3. savings offer
arrow_forward
Multiple Choice Question... pick one answer
An economy can increase its capital stock by
A) reducing consumption spending.
B) reducing population growth.
C) closing its borders to international trade.
D) increasing consumption spending.
arrow_forward
a. As the interest rate rises, does the intertemporal budget constraint become steeper or flatter?
b. Would the assumption that goods are perfect substitutes be valid in a study of intertemporal food purchases?
arrow_forward
An economy is described by the following equations:
Y = C + I, + G
C = a + b(Y – T)
T = tY
%3D
%3D
Let a = 20,6 = 0.75, t = 0.25, I, = 100, G = 240
%3D
(a) Determine the value of the multiplier for this economy, and find the equilibrium
value of Y.
(b) Find the values of C, T and G-T, given your answer to part (a).
(c) Describe what would happen if the government tried to eliminate its budget deficit
by undertaking a cut in G equal to the current value of G-T.
HTML Editor
B IUA A
▼
回 深
D ¶ T 12pt
Paragrap
II
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Use the conversation part to answer (B) part.
ALEX: Hi, Becky. I’m intrigued to see how macroeconomics allows us to explain recent economic events such as the Great Recession that affected so many people. But there’s one thing I don’t understand. Was the collapse of the housing bubble the only cause of the recession, or were there other factors as well?
BECKY: Hi, Alex. I agree that macroeconomic theory offers an entirely new perspective on how the economy works. To answer your question, the crash of the housing market was a major factor but not the only cause of the Great Recession. The professor mentioned that the __________ (options: financial, fiscal, government) system deteriorated as well, an event that deepened the economic downturn even further.
ALEX: I see. So the bursting of the housing bubble caused the initial decline in aggregate demand. Then the financial crisis caused aggregate demand to decline even more. Could you also help me understand how to use the aggregate demand…
arrow_forward
Use the conversation part to answer (B) part.
ALEX: Hi, Becky. I’m intrigued to see how macroeconomics allows us to explain recent economic events such as the Great Recession that affected so many people. But there’s one thing I don’t understand. Was the collapse of the housing bubble the only cause of the recession, or were there other factors as well?
BECKY: Hi, Alex. I agree that macroeconomic theory offers an entirely new perspective on how the economy works. To answer your question, the crash of the housing market was a major factor but not the only cause of the Great Recession. The professor mentioned that the __________ (options: financial, fiscal, government) system deteriorated as well, an event that deepened the economic downturn even further.
ALEX: I see. So the bursting of the housing bubble caused the initial decline in aggregate demand. Then the financial crisis caused aggregate demand to decline even more. Could you also help me understand how to use the aggregate demand…
arrow_forward
Part I. Answer the following questions with a
word, phrase, or number.
2. The local pizzeria is considering buying a
new pizza oven. The oven maker costs
$5,000. It is expected to generate profits of
$250 per year every year forever (in other
words, using the language of the neoclassical
investment model, the marginal product of
capital is 5%). It depreciates in value by 3
percent per year. What is the maximum value
of the interest rate for which it would be
profitable for the bakery to buy the machine?
arrow_forward
Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote.
PLEASE WRITE ALL THE STEPS ORGANIZED CLEARLYTO RECEIVE THUMBS UP
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State (c): Economy can bounce around infinitely between k' and
k" without converging.
State (d): Animal spirits play an important role when economic
activity is stagnant.
kM.
k
k
k
Question 4: Consider the function N(k+1) = "*1, where s, = s(r:+1) = s(r(k+1)).
St
Differentiate the function N(k+1) with respect with k+1, and express the result using
dlog(st)
dlog(1+rt+1)
-and
dlog(1+rt+1)
dlog(kt+1)
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1.11 If desired investment exceeds actual investment, then…a) The economy is in a recession.b) Inventories are less than the desired level.c) Inventories are accumulating beyond the desired levels.d) Cyclical unemployment exists.
1.12 Read the following extract and answer the question that follows.
Women’s empowerment movement eyes 40% of government spending accreditation…Last year the South African government affirmed its support for women-owned businesses as part of its commitment to ensuring that gender equality in Africa’s most advanced economy was achieved.
President Cyril Ramaphosa said then: “We are going to drive women’s economic inclusion through public procurement. We have set the target of ensuring that 40% of goods and services procured by public entities are procured from women-owned business.”
Source: https://www.news24.com/citypress/news/womens-empowerment-movement-eyes-40-of-government-spending-20210819The above decision by the South African government is an example…
arrow_forward
1.11 If desired investment exceeds actual investment, then…a) The economy is in a recession.b) Inventories are less than the desired level.c) Inventories are accumulating beyond the desired levels.d) Cyclical unemployment exists.
1.12 Read the following extract and answer the question that follows.
Women’s empowerment movement eyes 40% of government spending accreditation…Last year the South African government affirmed its support for women-owned businesses as part of its commitment to ensuring that gender equality in Africa’s most advanced economy was achieved.
President Cyril Ramaphosa said then: “We are going to drive women’s economic inclusion through public procurement. We have set the target of ensuring that 40% of goods and services procured by public entities are procured from women-owned business.”
The above decision by the South African government is an example of…a) Market participation.b) Government spending.c) Commercialisation.d) Nationalisation.
1.13 Read the following…
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Suppose the savings rate (s) in the economy is 30%, GDP is $1,000, and investment can be expressed as I=s*Y. Calculate the level of investment in this economy.
Question 9 options:
1)
$600.
2)
$330.
3)
$300.
4)
$150.
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QUESTION 8
As a result of entering the world economy, Neverland experiences economic boom and its GDP goes up to y– 13250: The function that describes consumption is the
same, cdr) = 5000 – 1000r + 0.25Y. but the investment curve shifted to the right: jd()=550-– 1800r + 0 2y. This is because firms expect growth to continue
in the future and want to invest more. Government spending is also the same: G- 1800: The world interest rate is 5%. What is Neverland's current account balance?
Note: Type in your answer approximated to two decimal points, i.e., your answer must be of the form "999.99". I will not be able to fix correct answers that were entered
incorrectly, such as "999.999" or "999,99" or "999". In case the last digit in the correct answer is zero, e.g., "999.90" or "999.00", Blackboard will automatically delete it
and you should not do anything about it.
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Which of the following statements is true?
An individual's future spending decreases when she lends money.
An individual's future spending increases when she borrows money.
An economic agent borrows to move her spending from the future to the present.
An economic agent borrows to move her spending from the present to the future.
Loss aversion refers to the idea that people ________.
generally tend to avoid risky activities
are more prone to making losses than gains in day-to-day transactions
psychologically weight a loss more heavily than they psychologically weight a gain
are unwilling to undertake expenditures that reduce the probability of future losses
Which of the following is an example of adverse selection?
Overgrazing of a common piece of land
A passenger traveling in a subway without a ticket
A customer buying a defective appliance from a used goods market
The generation of hazardous waste by the production of a good
More people started building houses in the…
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I don't know if I am suppose to use r value from the previous question which is 0.05 or I have to find a new r value for this question. (Same question but different G value)
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3) In the macroeconomic model below, Y is aggregate output, C is aggregate consump-
tion, Io is aggregate investment, Go is government spending, T is the total amount of taxes
collected by the government, and t is income tax rate. The variables Y, C, and I are
endogenous, Go, Io, and t are exogenous, and a, b, and k are parameters.
Y = C + Io + Go
C = a + b(YT)
T=k+tY
(a > 0, b = (0, 1))
(k > 0, t = (0, 1))
Calculate the determinant of the coefficient matrix A associated with this system of
equations. The determinant of the coefficient matrix A is:
a) |A| = 1-b+ bt
b) |A| = 1-b-bt + a
c) |A| = b + t
d) |A| = 1+ a + b - t
e) |A| = Go +b+t
f) A = Iob+t
g) A = Go + Io +b-t
arrow_forward
Josel owns two fields: Green
4. Joint PPF and quantity restriction
field and Blue field. He can produce corn and wheat. Green field has 80 acres, and it
takes 10 acres to produce 1 bushel of corn and 20 acres to produce 1 bushel of wheat.
Blue field has 100 acres, and it takes 20 acres to produce 1 bushel of corn and 10
acres to produce 1 bushel of wheat. Suppose that the government imposes a quantity
restriction on only corn. Specifically,
A quantity restriction of 4 bushels of corn in Green field. That is, Green field is
allowed to produce at most 4 bushels of corn, and
A quantity restriction of 2 bushels of corn in Blue field. That is, Blue field is
allowed to produce at most 2 bushels of corn.
(a)
Sketch the joint PPF. Clearly label your graph (i.e., indicate values
for slopes, intercept(s), endpoint (s), and kink(s)).
arrow_forward
The paradox of saving revisited You should be able to complete this question without doing any algebra, although you may find making a diagram helpful for part (a). For this problem, you do not need to calculate the magnitudes of changes in economic variables—only the direction of change. a. Consider the economy described in Problem 8. Suppose that consumers decide to consume less (and therefore to save more) for any given amount of disposable income. Specifically, assume that consumer confidence (c0) falls. What will happen to output? b. As a result of the effect on output you determined in part (a), what will happen to investment? What will happen to public saving? What will happen to private saving? Explain. (Hint: Consider the saving-equals-investment characterization of equilibrium.) What is the effect on consumption? c. Suppose that consumers had decided to increase consumption expenditure, so that c0 had increased. What would have been the effect on output,…
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COVID-19 has sent the economy of Classica into recession. The finance ministry has advised the government to lower stamp duty and other purchase service charges for those wanting to buy existing houses in order to boost economic growth. As well, the finance ministry wants the government to also cut company taxes as this will lead to firms increasing their level of investment in the economy. The President of Classica has asked you, as her chief economic advisor, for your views.
Would a cut in stamp duty and other purchase charges on the purchase of existing houses really boost the economy?
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On an average, real GDP per capita has grown at a much slower rate in USA than in Japan after the second world war. This is because of much lower levels of GDP per capita in USA than in Japan around the second world war time.
Explain whether the given statement is true, false or uncertain. Start your answer by selecting one of the options – “True”, “False” or “Uncertain” and then provide arguments to justify your selection.
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Related Questions
- Sally wants to take out her entire savings from her superannuation to spend today. Is this acting in a time inconsistent manner (according to behavioural economics)? a) Yes b) No Explain:arrow_forwardI need clarification on what a "numerical solution" should be in the context of my economic question. Is it simply a number or numerical value, or is it a formula? I'm not looking for the answer to this problem. I am just making sure i understand the question. See attached.arrow_forwardThe introduction of new a technology in an economy implies: what happens when the market is pessimistic in its expectations about the future economy?arrow_forward
- Please note that the bold red and blue lines below demonstrate the quantity versus price relationship for supply and demand in normal circumstances for a particular product. Note: The horizontal axis is quantity, and the Vertical axis is price. 2900 2800 2700 2600 2500 2400 2300 2200 2100 2000 1900 1800 1700 1600 1500 1400 1300 1200 1100 1000 900 800 700 600 500 400 300 200 100 0 -Curve A -Curve B 0 Supply and Demand Curves: →→ Curve C 5 10 15 20 25 30 35 40 --Curve D ---Curve E -Curve F 45 50 55 60 65 70 75 80 85 90 95 100 105arrow_forwardComment, on the likely outcome with sufficient arguments? a) Impact on GDP when, Interest rates have come down in the countryb) Impact on balance of payment, when there is a huge demand of vaccines produced in India in South Africa.c) Inflation rate in India reaches negative 2% (-2%)d) The aggregate demand falls short of aggregate supply in the economyarrow_forwardPlease only solve parts a, b, and c of this introductory economics question!arrow_forward
- Please Solve Fast All Part I give Good Feedback and Upvote. Thank you.arrow_forwardThe purpose is to know if you can define each concept through a clear and precise explanation. Imagine that you are going to explain each term to someone who does not know anything about macroeconomics; With this in mind, the explanation should be as clear and simple as possible (not brief). Write a minimum of three sentences per term.1. investment demand2. surplus3. savings offerarrow_forwardMultiple Choice Question... pick one answer An economy can increase its capital stock by A) reducing consumption spending. B) reducing population growth. C) closing its borders to international trade. D) increasing consumption spending.arrow_forward
- a. As the interest rate rises, does the intertemporal budget constraint become steeper or flatter? b. Would the assumption that goods are perfect substitutes be valid in a study of intertemporal food purchases?arrow_forwardAn economy is described by the following equations: Y = C + I, + G C = a + b(Y – T) T = tY %3D %3D Let a = 20,6 = 0.75, t = 0.25, I, = 100, G = 240 %3D (a) Determine the value of the multiplier for this economy, and find the equilibrium value of Y. (b) Find the values of C, T and G-T, given your answer to part (a). (c) Describe what would happen if the government tried to eliminate its budget deficit by undertaking a cut in G equal to the current value of G-T. HTML Editor B IUA A ▼ 回 深 D ¶ T 12pt Paragrap IIarrow_forwardUse the conversation part to answer (B) part. ALEX: Hi, Becky. I’m intrigued to see how macroeconomics allows us to explain recent economic events such as the Great Recession that affected so many people. But there’s one thing I don’t understand. Was the collapse of the housing bubble the only cause of the recession, or were there other factors as well? BECKY: Hi, Alex. I agree that macroeconomic theory offers an entirely new perspective on how the economy works. To answer your question, the crash of the housing market was a major factor but not the only cause of the Great Recession. The professor mentioned that the __________ (options: financial, fiscal, government) system deteriorated as well, an event that deepened the economic downturn even further. ALEX: I see. So the bursting of the housing bubble caused the initial decline in aggregate demand. Then the financial crisis caused aggregate demand to decline even more. Could you also help me understand how to use the aggregate demand…arrow_forward
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SEE MORE QUESTIONS
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