QCM Macroeconomics exam

Vrai ou faux cours du soir

Version A: Questions “Vrai-faux”
Les propositions suivantes sont-elles vraies ou fausses? Justifiez vos réponses en quelques lignes.
Attention, une réponse « vrai/faux » sans justification ne sera pas prise en compte.

1) (6 points) Une réduction de la qualité des biens (pour quantités et prix données) n’a aucun
impact sur le produit intérieur nominal net.
Solution : Vrai. Le produit intérieur nominal net mesure la valeur marchande des biens produits
dans un pays – moins amortissements. Si quantités et prix sont données, ce valeur ne depend pas
de la qualité des biens.

2) (6 points) Si i = 1%, le cours d’une obligation avec durée résiduelle d’un an qui paye 707 euros
en t = 1 est 699 en t = 0.
Solution : faux. Le cours P de l’obligation dans ce cas est donné par P=707/1,01=700.

3) (7 points) Dans une trappe à liquidité, la banque centrale ne peut que baisser le taux
d’intérêt réel r si elle arrive à augmenter les anticipations d’inflation

Solution : vrai : r = i – pi_e, et dans une trappe à liquidité, i=0. Car i ne peut pas devenir négative
(si non, personne ne va acheter des titres), la banque centrale ne peut pas baisser i dans ce cas et r
ne peut que baisser si pi_e augmente.

4) (6 points) Si le levier devient plus large, le risque de faillite d’une banque diminue

Réponse : faux. Le levier est défini par levier = actifs/fonds propres. Si le levier augmente, les
fonds propres risquent alors de s’effondre (causant une faillite) plus rapidement s’il y a une
perte de valeur des actifs (comparé au cas ou il y a plus de fonds propres rélatif aux actifs et
alors un levier plus bas).

5) (6 points) Le taux d’emploi est indépendant du taux de chômage si le nombre de « non

candidats » reste fixe
Faux. Le taux d’emploi est donné par le nombre des actifs, divisé par la population active
potentielle. Si le nombre de non-candidats reste fixe, un changement du taux de chômage implique
un changement du nombre des actifs. Alors, le taux d’emploi va aussi changer si le taux de chômage
change dans ce cas-là.

6) (7 points) Si le taux de change est flexible et la condition de Marshall-Lerner est satisfaite,

une réduction du taux d’intérêt (sans changement d’autres variables) augmente
l’investissement et diminue les exportations nettes (dans l’équilibre de court terme en
économie ouverte)

Faux, une réduction du taux d’intérêt implique une dépréciation de la monnaie nationale (à cause
du condition du parité du taux d’intérêt) ce qui implique une augmentation des exportations nettes
NE si ML satisfait. (Si NE augmente, Y augmente, et alors I augmente (car i diminue). Cette partie
du phrase st alors correcte).
(Peut-être quelqu’un a mal-compris que « sans changement d’autres vairables » ne veut pas dire
sans changement du taux de change…)

7) (6 points) L’équilibre sur le marché du travail implique que le salaire réel baisse si le pouvoir
du marché des entreprises baisse

Faux : P = W(1+m) (price setting), alors, W/P = 1/(1+m). Si le pouvoir des entreprises baisse, m
baisse et le salaire reel W/P augmente.

8) (6 points) La création de monnaie « hors banque centrale » augmente si les

consommateurs demandent plus de dépôts relatifs aux billets.

Vrai. Le multiplicateur qui indique combien de monnaie est crée sur base du monnaie offert par la
banque centrale est donné par 1/(c+theta(1-c)) avec theta=reserves/depots <1. Alors, si c diminue
à cause d’une augmentation d’une demande de dépots rélatif aux billets, le multiplicateur augmente
et alors la création de monnaie « hors banque centrale ».
Aout 2021

Janvier 2021
Question 1 :
Which of the following measures gets closest to measuring the “welfare” of the residents of
a country?

La réponse correcte est : The real net national product.

Question 2 :
Which statement about the trade between a domestic and foreign countries is correct?

La réponse correcte est : An appreciation of the domestic currency increases net exports in
the short run and decreases them after some time when the Marshall-Lerner condition
holds

Question 3:
Consider the equilibrium in the labor market (with the following notation: Pe = expected
price level ; P = price level ; m = markup ; u = unemployment rate ; z = degree of
unemployment protection). Which of the variables have a positive effect on the equilibrium
price level P?

La réponse correcte est : Only Pe , m and z

Question 4 :
Which statement is correct? The natural unemployment rate un..

La réponse correcte est : …increases if the price of oil increases.

Question 5:
Consider a bond which promises to pay 330 Euros in one year (t=1). Which statement is
correct?

La réponse correcte est : The price of the bond (in t = 0) is 300 if i = 10%.

Question 6
Which statement is correct?
The (uncovered) interest rate parity condition...

La réponse correcte est : …can be satisfied if the nominal interest rate in the Eurozone is
lower than that in the US (assuming identical risks) and if investors anticipate an
appreciation of the Euro relative to the Dollar.

Question 7:
Consider the IS-LM-PC model in which expected inflation is always equal to last year’s
inflation and in which i = 0 always holds. Inflation expectations are initially equal to zero.
Which statement is correct?
La réponse correcte est : When initially Y < Yn holds, output keeps falling over time.

Question 8:
Consider the short-run equilibrium in the IS-LM-PC model. Output is fix (due to a fix real
interest rate) and larger than potential output (Y > Yn) and the Phillips curve indicates that π
- πe = 2% holds for the current level of output. In year t = 1, inflation is equal to 3%.
Households always expect next year’s inflation to be equal to this year’s inflation. How large
is inflation in year t = 4?

La réponse correcte est : 9%

Question 9:
Consider the extended IS-LM model (closed economy, fixed prices) and assume that the risk
premium (x) increases when the leverage of private banks increases. Which of the following
statements is correct?

La réponse correcte est : When the ratio of bank capital relative to bank assets increases
and when r is unchanged, Y increases.

Question 10
Consider the IS-LM model (closed economy, fixed prices). Suppose that consumer
confidence increases. Which statement is correct?
La réponse correcte est : When the interest rate is kept constant, the equilibrium money
supply increases.

Aout 2020
For each question only one of the 5 answers is correct, in total, you can get 70 points from
this part of the exam

1. Consider the demand for money in a closed economy. Which statement is correct?
a. For a given total wealth, a reduction in money demand implies an increase in
the demand for bonds.
b. If Y increases and I (the nominal interest rate) and P (the price level) stay
constant, the demand for money falls.
c. In equilibrium, i falls if P rises and if M (the supply of money) and Y stay
unchanged
d. If i increases and Y and P stay the same, the demand for money increases
e. The central bank can increase the interest rate by increasing the supply of
money when P and Y stay unchanged

2. Which statement concerning the monetary system is correct?

a. Central bank money consists of currency and deposits
b. If commercial banks have to holds more reserves at the central bank, they can
create more deposits
c. If consumers demand more cash relative to deposits, there is less creation of
money by commercial banks
d. In the balance sheet of the central bank, central bank money is considered as
an asset
e. In the balance sheet of a commercial bank, deposits are considered as assets

3. Which proposition concerning the real interest rate r is correct? (assume that the risk
premium is equal to zero)
a. If the nominal interest rate i is given, r increases if expected inflation increases
b. r cannot be negative
c. In a liquidity trap (at the zero-lower bound), the central bank can only decrease
r if it can increase inflation expectations
d. The central bank can directly set r
e. If the expected rate of inflation is constant, i = r always holds

4. Which proposition concerning commercial banks is correct?

a. Leverage increases if a bank has less capital relative to assets
b. The capital ratio of a bank is equal to its debt divided by its assets
c. If leverage becomes larger, the risk of bankruptcy of a bank decrease
 d. If investment risks increase, the interest rate increases, and the IS curve shifts
right.
e. A higher leverage reduces the profits of a solvent bank

5. Consider a bond which promises to pay 1050 Euros in one year (t = 1)

a. The price of the bond (in t = 0) is 900 if i = 5%
b. The price of the bond (in t = 0) is 1000 if i = 10%
c. The price of the bond (in t = 0) is 1100 if i = 10%
d. The price of the bond (in t = 0) is 1000 if i = 5%
e. The price of the bond (in t = 0) is 1050 if i = 5%
6. Consider a perfect financial market with risk-neutral investors in which bonds with
one-year and two-year maturities are traded in period t. suppose that i1t = 7%.
(interest rate on one-year bonds) and that i2t = 5% (interest rate on two-year bonds).
Which statement is correct?

a. The yield curve is upward sloping

b. Ie1t+1 (the expected one-year interest rate in one-years’ time) is approximately
equal to 6%
c. Ie1t+1 (the expected one-year interest rate in one-years’ time) is approximately
equal to 2%
d. The yield curve is horizontal
e. Ie1t+1 (the expected one-year interest rate in one-years’ time) is approximately
equal to 3%

7. A 20-year-old tennis player has inherited 100 000 € from her parents and expects to
earn one million € every year until the age of 30. Afterwards, she plans to retire and
expects to have no further income. She wants to smooth consumption and to spend
all her money before her death, which she anticipates being at age 70. Financial
markets are perfect, and she can borrow and lend at the interest rate zero. How much
does she consume each year (from age 20 until age 70)?

a. 505 000 €
b. 250 000 €
c. 102 000 €
d. 200 000 €
e. 202 000 €

8. Which of the following interventions reduces the nominal net national product?
a. A reduction in the quality of goods (for given quantities and prices)
b. A reduction of the capital income that residents obtain from the rest of the
world
c. An increase in the GDP deflator
d. An increase in the level of stress caused by work (for given labor supply)
e. A reduction of the depreciation rate

9. Which statement related to the balance of payments is correct (assume that there is
no statistical discrepancy)?
 a. Foreign aid received from the rest of the world is recorded in the capital
account
b. An increase in capital income obtained from the rest of the world increases the
net income balance. This reduces both the current account and the capital
account balances
c. When the net exports of a country increase, its net foreign indebtedness
increases, implying an increase in the capital account balance
d. An increase in exports that leads to an increase in the current account surplus
implies an increase in the capital account deficit
e. Foreign direct investments are recorded in the current account

10. Consider the real exchange rate 𝜀 between the Euro (domestic) and the Dollar
(foreign). Which proposition is correct?
a. If the nominal exchange rate and the price level in the Euro zone remain fixed,
but if the price level in the US increases, 𝜀 increases
b. If 𝜀 falls, the Euro depreciates, and the European economy becomes more
competitive relative to the American economy
c. If the price levels in Europe and the US stay fixed and if the nominal exchange
rate E falls, 𝜀 rises
d. If the nominal exchange rate stays constant, the competitiveness of the Euro
zone increases if the prices in the Eurozone rise faster than prices in the US
e. 𝜀 measures how many European goods one obtains for one US good

11. Which proposition concerning the short-run goods market equilibrium in an open
economy is correct?
a. If the national currency depreciates and the Marshall-Lerner condition is
satisfied, net exports increase
b. If Y increases and the real exchange rate 𝜀 stays the same, net exports increase
c. If 𝜀 increases and all the other variables stay the same, exports increase if the
Marshall-Lerner condition is satisfied
d. Exports decrease if the income of the rest of the world increases
e. Imports decrease if the income of the rest of the world increases

12. Which statement related to the analysis of unemployment and labor markets is
correct?
a. In order to calculate the unemployment rate, one needs to know the total
size of the population and not only the size of the labor force
b. Discouraged workers are counted as unemployed
c. The participation rate is independent of the size of the population
d. Workers are usually paid their reservation wage
e. Efficiency wage theories link the productivity of workers to the wage they are
paid.

13. Consider an open economy in which T = G holds (balanced government budget).

Which statement is correct?
a. Saving is always equal to investment
b. If the current account increases as exports increase, saving must fall if all
other variables stay the same
c. If the current account increases as net transfers from abroad increase,
investment must rise if all other variables stay the same
d. If saving is larger than investment, the current account must be positive
e. The current account is equal to investment minus saving
Macroeconomics exam

Blue (A)

For each question, only one of the 5 answers is correct, you can get 70 points from this part
of the exam.

1. Which of the following interventions reduces the nominal net national product?
a. A reduction in the quality of goods (for given quantities and prices)
b. An increase in the GDP deflator
c. An increase in the level of stress caused by work (for given labor supply)
d. A reduction of the capital income that residents obtain from the rest of the
world
e. A reduction of the depreciation rate

2. Which statement related to the balance of payments is correct (assume that there is
no statistical discrepancy)?
a. Foreign aid received from the rest of the world is recorded in the capital
account
b. An increase in capital income obtained from the rest of the world increases the
net income balance. This reduces both the current account and the capital
account balances
c. When the net exports of a country increase, its net foreign indebtedness
increases, implying an increase in the capital account balance
d. An increase in exports that leads to an increase in the current account surplus
implies an increase in the capital account deficit
e. Foreign direct investments are recorded in the current account

3. Consider the real exchange rate 𝜀 between the Euro (domestic) and the Dollar
(foreign). Which proposition is correct?
a. If 𝜀 falls, the Euro depreciates, and the European economy becomes more
competitive relative to the American economy
b. If the nominal exchange rate and the price level in the Euro zone remain fixed,
but if the price level in the US increases, 𝜀 increases
c. If the price levels in Europe and the US stay fixed and if the nominal exchange
rate E falls, 𝜀 rises
d. If the nominal exchange rate stays constant, the competitiveness of the Euro
zone increases if the prices in the Eurozone rise faster than prices in the US
e. 𝜀 measures how many European goods one obtains for one US good
4. Which proposition concerning the short-run goods market equilibrium in an open
economy is correct?
a. If the national currency depreciates and the Marshall-Lerner condition is
satisfied, net exports increase
b. If Y increases and the real exchange rate 𝜀 stays the same, net exports increase
c. If 𝜀 increases and all the other variables stay the same, exports increase if the
Marshall-Lerner condition is satisfied
d. Exports decrease if the income of the rest of the world increases
e. Imports decrease if the income of the rest of the world increases

5. Which statement related to the analysis of unemployment and labor markets is

correct?
a. In order to calculate the unemployment rate, one needs to know the total
size of the population and not only the size of the labor force
b. Discouraged workers are counted as unemployed
c. Efficiency wage theories link the productivity of workers to the wage they are
paid.
d. The participation rate is independent of the size of the population
e. Workers are usually paid their reservation wage

6. Consider an open economy in which T = G holds (balanced government budget).

Which statement is correct?
a. Saving is always equal to investment
b. If saving is larger than investment, the current account must be positive
c. If the current account increases as exports increase, saving must fall if all
other variables stay the same
d. If the current account increases as net transfers from abroad increase,
investment must rise if all other variables stay the same
e. The current account is equal to investment minus saving

7. Consider the demand for money in a closed economy. Which statement is correct?
a. If Y increases and I (the nominal interest rate) and P (the price level) stay
constant, the demand for money falls.
b. In equilibrium, i falls if P rises and if M (the supply of money) and Y stay
unchanged
c. For a given total wealth, a reduction in money demand implies an increase in
the demand for bonds.
d. If i increases and Y and P stay the same, the demand for money increases
e. The central bank can increase the interest rate by increasing the supply of
money when P and Y stay unchanged
8. Which statement concerning the monetary system is correct?
a. Central bank money consists of currency and deposits
b. If commercial banks have to holds more reserves at the central bank, they can
create more deposits
c. In the balance sheet of the central bank, central bank money is considered as
an asset
d. In the balance sheet of a commercial bank, deposits are considered as assets
e. If consumers demand more cash relative to deposits, there is less creation of
money by commercial banks

9. Which proposition concerning the real interest rate r is correct? (assume that the risk
premium is equal to zero)
a. If the nominal interest rate i is given, r increases if expected inflation increases
b. In a liquidity trap (at the zero-lower bound), the central bank can only decrease
r if it can increase inflation expectations
c. r cannot be negative
d. The central bank can directly set r
e. If the expected rate of inflation is constant, i = r always holds

10. Which proposition concerning commercial banks is correct?

a. The capital ratio of a bank is equal to its debt divided by its assets
b. If leverage becomes larger, the risk of bankruptcy of a bank decrease
c. If investment risks increase, the interest rate increases, and the IS curve shifts
right.
d. A higher leverage reduces the profits of a solvent bank
e. Leverage increases if a bank has less capital relative to assets

11. Consider a bond which promises to pay 1050 Euros in one year (t = 1)
a. The price of the bond (in t = 0) is 900 if i = 5%
b. The price of the bond (in t = 0) is 1000 if i = 10%
c. The price of the bond (in t = 0) is 1000 if i = 5%
d. The price of the bond (in t = 0) is 1100 if i = 10%
e. The price of the bond (in t = 0) is 1050 if i = 5%

12. Consider a perfect financial market with risk-neutral investors in which bonds with
one-year and two-year maturities are traded in period t. suppose that i1t = 7%.
(interest rate on one-year bonds) and that i2t = 5% (interest rate on two-year bonds).
Which statement is correct?
a. Ie1t+1 (the expected one-year interest rate in one-years’ time) is approximately
equal to 3%
b. The yield curve is upward sloping
c. Ie1t+1 (the expected one-year interest rate in one-years’ time) is approximately
equal to 6%
d. Ie1t+1 (the expected one-year interest rate in one-years’ time) is approximately
equal to 2%
e. The yield curve is horizontal
13. A 20 year old tennis player has inherited 100 000 Euros from her parents and expects to
earn one million Euros every year until the age of 30. Afterwards, she plans to retire and
expects to have no further income. She wants to smooth consumption and to spend all her
money before her death, which she anticipates to be at age 70. Financial markets are perfect
and she can borrow and lend at the interest rate zero. How much does she consume each
year (from age 20 until age 70)?
A) 505 000 Euros.
B) 250 000 Euros.
C) 102 000 Euros.
D) 202 000 Euros.
E) 200 000 Euros.

14. Assuming equal risks and no transaction costs, the (uncovered) interest rate parity
condition…
A) … holds when the exchange rate is fixed, but not when it is flexible.
B) … implies that the interest rate is larger in the country in which the currency is expected to
appreciate.
C) … can only hold if two currencies are pegged to each other.
D) … is violated if inflation rates are not the same in two countries.
E) … implies that a central bank can only obtain a fixed exchange rate with respect