中山大学岭南学院——中级宏观经济学模拟试题 5

1(15 points) As we all know China is suffering from moderate inflation. The following is about the relevant basic concept.

1) (3 points) what’s the definition of inflation, and how to measure? 2) (4 points) what’s the definition of inflation tax, and how to measure? 3) (4 points) what’s the dynamic inconsistency, and how to solve it?

4) (4 points) please comment on the inflation in China, such as cause, solution and

so on.

2(15 points) Please consider the derivation of AD schedule. 1) (3 points) what’s the definition of AD curve?

2) (6 points) graphically derive the AD schedule when the monetary authority is

targeting the money stock.

3) (6 points) graphically derive the AD schedule when the monetary authority is

targeting the interest rate.

3 (20 points) The following equations describe an economy (Think ofC,I,G,etc, as being measured in Billions and ias a percentage.)

C󰀠0.8(1󰀐t)YI󰀠900󰀐50iG󰀠800,t󰀠0.25MD

󰀠0.25Y󰀐62.5iP

MS󰀠500

1) (6 points) What are the equations that describe theIScurve, LMcurve and

ADcurve?

2) (10 points) Suppose the government spending increase to 1000, and that monetary policy is accommodating, what does the monetary authority do?

3) (4 points) By how much do the changes in policy mix affect the AD curve? 4 (20 points) Suppose an economy, which is at its natural level, experiences a permanent decline in marginal propensity to consume.

1) (5 points) graphically Show, in theIS󰀐LMframework, the effects of the decline

ChhaXCanngF--XgeDFePPDClick to buy Nwwcc..ddok..occkcuacrau-tr-tomOW!wwin marginal propensity to consume.

2) (5 points) graphically Show, in the Solow model, the effects of the decline in marginal propensity to consume.

3) (5 points) graphically Show, in theAS󰀐ADframework, the effects of the decline in marginal propensity to consume.

4) (5 points) comment on your answers to parts <4.1>, <4.2> and <4.3>.

5 (20 points) Suppose a person who lives for three periods and earns incomes of 30, and 60 in the first two periods of life cycle. There are no earnings during retirement.

1󰀐󰁔1󰀐󰁔󰀐󰁔c1c1c

Assume the interest rate is 0, and the life-time utility is U󰀠󰀎2󰀎3,󰁔󰀡0

1󰀐󰁔1󰀐󰁔1󰀐󰁔1) (4 points) if the credit market is open to individuals, determine the level of consumption for the person who maximizes the life-time utility.

2) (4 points) if the credit market is close to individuals, determine the level of consumption for the person who maximizes the life-time utility.

3) (8 points) Suppose there is a pay-as-you-go social security system in the economy, whereby 10 lump-sum taxes on the currently working generation in every period are used to fund payments to retirees. Now, check changes in your solutions to parts <5.1> and <5.2>.

4) (4 points) comment on the consumption in China.

6(10 points) Consider China economy with four sectors, that’sAD󰀠C󰀎I󰀎G󰀎NEX. For simplicity, think of NEX as autonomous foreign demand, and being measured as US dollar. The central bank buysNEXat the fixed exchange rate, and therefore endogenously increases the money supply.

1) (5 points) Show, in theIS󰀐LMframework, the effects of the increase inNEX.

2) (5 points) Suppose China economy is at potential level initially, what is the

required policy to deal with the increase inNEX? Use theIS󰀐LMframework to show your proposal.