RMIT UNIVERSITY FACULTY OF BUSINESS SCHOOL OF ECONOMICS AND FINANCE SIM SEMESTER 1: 2012 ECON-1045 Macroeconomics 2 TEST 2 (MOCK) Instructions: 1. Fill in your name and other details on page 2 before beginning the test. DO NOT DETACH PAGE 2 FROM THE QUESTION SHEETS. 2. You must answer all twenty eight questions in the time allowed for the test (Note: In the actual test‚ there are only 20 questions!) 3. For each question‚ choose the
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policies from the 1950s onwards. The rationale for doing so is extensive. One reason is known as the infant industry argument. This is where domestic industries are protected through government backing‚ help‚ and intervention. This mainly applies to liquidity-constrained companies that are unable to incur short-term losses. The main benefit is to create a level playing field between a backdated industry and a highly advanced industry producing similar goods and services. Without this protection‚ it would
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Macroeconomics help Name: Institution: Inflation is the rise in general prices of goods and services over a specific period of time. Unemployment is a state where people are able and willing to work at the ongoing market prices of labour but they are unable to secure a job. According to the Phillips curve‚ there is a consistent relationship between inflation and unemployment (Nevile‚ J. W. 1981‚ pg 3). When the rate of unemployment is low‚ the level of inflation is high and when the level
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at Hong Kong Exchanges and Clearing (HKEx)‚ notes the range of reasons drawing investors to the territory‚ in particular the market’s “great valuations which are often the envy of other exchanges around the world”. He adds that the high degree of liquidity and efficiency make it ideal for raising follow-on funds. In 2011‚ examples of high Price-Earnings ratios included Prada at 36x‚ L’Occitane at 25x and Sun Art Retail at 42x. 3) Hong Kong is also at present the only viable offshore centre for renminbi
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------------------------------------------------- Chapter 34 The Influence of Monetary and Fiscal Policy on Aggregate Demand Multiple Choice 1. Shifts in the aggregate-demand curve can cause fluctuations in a. | neither the level of output nor the level of prices. | b. | the level of output‚ but not in the level of prices. | c. | the level of prices‚ but not in the level of output. | d. | the level of output and in the level of prices. | ANS: D PTS: 1 DIF: 1 REF: 21-0
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depends on Mt and r/i responsiveness of Ma R/i ↑ -> Y ↓ R/i responsiveness of IDC does not affect slope of LM R/i responsiveness of IDC affects slope of IS Steep LM = Monetary policy effective Steep IS = Monetary policy ineffective Liquidity trap = r/i pushed lower and lower = Monetary policy ineffective ↑G --> shift IS to the right by k.△ G and increase Ye by less than that amt (crowding out) AD curve can be derived from IS-LM by shifting LM as △ P via Interest Rate Effect IS
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In economics‚ deflation is a sustained decrease in the general price level of goods and services.[1] Deflation occurs when the inflation rate falls below zero percent‚ resulting in an increase in the real value of money — a negative inflation rate. This should not be confused with disinflation‚ a slow-down in the inflation rate (i.e. when the inflation decreases‚ but still remains positive).[2] Inflation reduces the real value of money over time‚ conversely‚ deflation increases the real value of
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first place‚ thus displacing other economic activities. In the end‚ the government has simply moved around economic activity without increasing it in the aggregate. The problem is that fiscal stimulus needs to be injected right now to counter the liquidity trap. If that were the case‚ I think we might well get a very high multiplier effect this year. But if much of the stimulus doesn’t come online until next year‚ when we are likely to be past the worst of the slowdown‚ then crowding out will greatly
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you is $10200‚ what is the implicit compound annual interest rate you will receive(to the nearest whole percent)? 4. Why is beta a measure of systematic risk? What is its meaning? 5. Explain why a long term creditor should be interested in liquidity ratios? In trying to judge whether a company has too much debt‚ what financial ratios would you use and for what purpose? 6. Why do most audited financial reports to the shareholders include a statement of cash flows in addition to the balance
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TOMAS L. OLFATO ANSWERS TO GROUP 4 EXAM ECON 204 (NOTE: ANSWERS ARE HIGHLIGHTED IN YELLOW) PART I. (5 points each) A. An increase in government spending will shift the IS curve to left increasing output with higher interest rate. [pic] Expansionary monetary policy or Contractionary monetary policy. a) To maintain the same level of output‚ what monetary policy should BSP implement? ANSWER: EXPANSIONARY MONETARY POLICY (Increasing money supply lowers interest
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