Homework Answers

1. In case of a flexible exchange rate and a weak capital mobility, a decrease of the nominal exchange rate lei/€ from 4.85 to 4.7 leads to:

a) a depreciation of the national currency;

b) an increase of exports;

c) an increase of the trade deficit;

d) a decrease of the balance of payments deficit.

2. The amount of the fixed capital depreciation is not part of the following macroeconomic indicator:

a) GNP;

b) GFCF (Gross fixed capital formation);

c) GDP;

d) NNP.

3. Given that the annual nominal interest rate is 2% and the CPI for the same year is 101.5%, the real interest rate is:

a) 0.5%;

b) 1.97%;

c) -0.5%;

d) 3.5%.

1. The income obtained by an Italian working in a Romanian company is part of: so

a) the Romanian GNP and the Italian GDP;

b) the Romanian GNP and the Italian GNP;

c) the Romanian GDP and the Italian GNP;

d) none of the above.

2. In case of an IS-LM model, an increase in autonomous taxes will make:

a) IS shift to the right;

b) IS rotate to the left;

c) LM shift to the left;

d) none of the above.

3. In a closed economy the propensity of consumtion is c=0.9 and the tax rate t=0.3. A decrease in the government expenditures by 10 bil. lei will lead to a change in GDP by about:

a) -27 bil. lei;

b) 27 bil. lei;

c) -50 bil. lei;

d) 50 bil. lei;

1. Okun's law states that:

a) if the real GDP increases by 2.5%, the unemployment rate decreases by 0.75%;

b) if the unemployment rate increases by 2.5%, the inflation rate will decrease;

c) if the unemployment rate increases by 2.5%, the economic growth will be negative;

d) if the inflation rate increases by 2.5%, the supply of goods decreases by 2.75%.

2. In an IS-LM model the propensity of consumption is c=0.75, the tax rate is t= 0.2, b=1000, k=0.3 and h=500. Identify the correct relation, where 𝜶𝑮 represents the multiplier of government expenditures on the goods and services market, while ΓBP and ΓMP are the multipliers of budgetary and monetary policy respectively for the IS-LM model:

a) ΓMP>ΓBP> αG;

b) ΓMP>αG >ΓBP;

c) αG >ΓBP> ΓMP; .

d) αG > ΓMP> ΓBP.

3. The changes in inventories represent:

a) a leading indicator of business cycles;

b) a lagging indicator of business cycles

c) a coincident indicator of business cycles;

d) none of the above.