武汉大学2008-2009学年第二学期期末考试经济与管理学院 2008级 2009年6月30日宏观经济学（A卷）Principles of Macroeconomics (Paper A)Instructions: You have two hours to complete the test. Full marks are 100 points. Write your answers on the answer sheet. You can answer your questions either in English or Chinese. Read the questions carefully before answering them. Be precise and to the point.Good luck!Problem 1 (10 points)True or False? Explain your answer completely but briefly.a.James Bond is about to retire and is thinking of selling his car. He spends £1,000in repairing and tuning the engine, and finally agrees to sell it to Miss MoneyPenny for £10,000. As a result, GDP increases by £11,000.b.Robinson Crusoe will live better by catching fish, if he has more physical capital,human capital, natural resources and technological knowledge.c.It is one case of moral hazard that a patient is more likely to apply for healthinsurance than healthy men.d.According to the theory of efficiency wages, firms who pay wages at theequilibrium level will operate more efficiently.e.The introduction of ATM machines has made it easier to withdraw cash fromchecking accounts. As a result, the Central Bank now has to buy more bonds in the market every time it wants to increase the stock of money in the economy by a certain amount.Problem 2 (10 points)Suppose there is a small farming economy. It produces some corn and imports 7 bushels of corn. Of these, 80 bushels are consumed, 10 go for government purchases to feed the army, and 6 go into domestic investment as increases in inventories, 11 bushels are exported. In addition, taxes are 12 bushels.a.What is the GDP of the economy?b.Calculate private saving, public saving and net capital outflow. Then explain therelationship between saving and investment.c.Assuming in the economy, women have worked more hours in producing corn.How would this affect GDP? Explain the paradox, “When a person marries his or her gardener, GDP goes down.” Do you think GDP is a good measure of national accounts?Problem 3 (10 points)Below are some data about Pizza and Latte.pute the GDP deflator for each year, using 2006 as the base year.b.Suppose that the base year for the CPI is 2006. If the CPI basket consists of 400pieces of pizza and 1000 cups of latte during the three years, compute the CPI for each year. What is the CPI inflation rate from 2007 to 2008?c.According to your computation, what is the difference between GDP deflator andCPI?Problem 4 (15 points)The Federal Reserve conducts a $20 million open-market purchase of government bonds. The required reserve ratio is 10 percent.a.What is the money multiplier? How can this purchase affect money supply? Whatis the largest possible effect? What is the smallest possible effect? Explain.b.Show the effects of this purchase in a diagram of money supply and moneydemand. What happpen to value of money and price level)?c.Can you find roles of commercial banks and individual depositors in the creationof money in terms of multiplier formula?Problem 5 (10 points)Suppose Japanese decided they no longer wanted to buy U.S. assets as before. Using a three-panel diagram used in textbook for open economy, show the following effectsof the change.a.What would happen in U.S. market for loanable funds? In particular, what wouldhappen to U.S. Interest rates, U.S. saving, and U.S. investment?b.What would happen in the market for foreign-currency exchange? In particular,what would happen to the value of the dollar and the U.S. trade balance?Problem 6 (15 points)Suppose that the economy is in a long-run equilibrium.e a diagram to illustrate the state of the economy. Be sure to show aggregatedemand, short-run aggregate supply, and long-run aggregate supply and explain why these curves look like this.b.Now suppose that a stock market crash causes aggregate demand to fall. Use yourdiagram to show what will happen to output and the price level in the short-run.What happen to the unemployment rate? And in the long run?c.Now suppose that a war in Middle East drives up the cost of producing oilproducts. What are the likely macroeconomic effects of such a change? Explain with the help of appropriate graphs.Problem 7 (15 points)a.Suppose the government increases its purchase expenditure by $20 billion, whichfinally raises the total demand for goods and services by $100 billion. If we ignore the possibility of crowding out, what would the marginal propensity to consume to be? If we allow for crowding out, would the marginal propensity to consume in this case be larger or smaller than their initial one?b.Suppose the government reduces taxes by $20 billion, there is no crowding out,and the MPC is 0.8. What is the initial effect of the tax reduction on aggregate demand? What is the total effect of this policy?c.How does the total effect of the $20 billion tax cut in part (b) compare to the totaleffect of a $20 billion increase in government purchase in part (a)? Why?Problem 8 (15 points)Suppose king's weather （好天气）drives down the cost of producing food products.a.Show the impact of such a change in both the aggregate-demand/aggregate-supplydiagram and in the Phillips-curve diagram. What happens to inflation andunemployment in the short-run?b.Do the effects of this event mean there is no short-run tradeoff between ininflation and unemployment? Why or why not?c.Suppose in the following year, bad weather brings stagflation, and the centralbank pursues contractionary monetary policy to reduce inflation. Use the Phillips curve to show the short-run and long-run effects of this policy. How might the short-run costs of the policy against inflation be reduced (6 points)?武汉大学2008-2009学年第二学期期末考试经济与管理学院 2008级 2009年6月30日宏观经济学（A卷）Principles of Macroeconomics ( Paper A )说明:考试时间为2小时，满分为100分。