Professional Documents
Culture Documents
Assignment 1, Macroeconomics 2016-2017
Assignment 1, Macroeconomics 2016-2017
CHAPTER 1
Question 1
Why are economists concerned about a (too) big budget deficit in the United States?
CHAPTER 2
Question 2
An economy produces and consumes merely bread and cars. The table below shows
the information for this economy for two different years.
2000 2010
Price of a car € 50,000 € 60,000
Price of bread € 10 € 20
Number of cars produced 100 120
Number of breads produced 500,000 400,000
Question 3
The figure below shows the GDP-deflator and the CPI-index of a small, open
economy.
a) Did this country face inflation or deflation from May 2009 to January 2011?
Explain clearly.
b) How would your answer at ‘a’ be relevant for the policy of the central bank of
this country, given the green grow path of 2%.
Question 4
What do economists mean by "labour market rigidities”? How can this rigidities
explain the relatively high unemployment in Europe?
Question 5
Is it possible that in a certain period the nominal GDP increases, while real GDP
drops? Why, why not?
Question 6
Sometimes economic statistics are corrected to reduce seasonally distortions. Why do
you think that it is important that the figures are being adapted in this way? How and
to what extent will not-adapted statistics lead to incorrect analysis? Clarify with one
or more examples.
CHAPTER 3
Question 7
See the model below:
C = 400 + 0,8(Y – T)
T = 250
I = 200
G = 300
Question 8
See the model below:
Z=C+I+G
C = 0,5YD + 600
T = 300
I = 500
YD = Y – T
G = 2200
CHAPTER 4
Question 9
Why is de demand curve for money downward sloping? Which factor(s) can cause the
demand curve to shift? Explain your answer.
Question 10
Give numerical examples of money creation by commercial banks when:
(a) c = 0, θ = 0.2
(b) c = 0, θ = 0.05