CFA Level I:Economics - Aggregate output, price, and economic growth 学习要点和习题精选 investment, interpret, economic, domestic, national

Wendy01

Learning Outcome Statements (LOS)
  

a     Calculate and explain gross domestic product (GDP) using expenditure and income approaches;
  

b     Compare the sum-of-value-added and value-of –final-output methods of calculating GDP;
  

c     Compare nominal and real GDP and calculate and interpret the GDP deflator;
  

d    Compare GDP, national income, personal income, and personal disposable income;   
  

e     Explain the fundamental relationship among saving, investment, the fiscal balance, and the trade balance;   
        

f      Explain the IS and LM curves and how they combine to generate the aggregate demand curve;
  

g     Explain the aggregate supply curve in the short run and long run;
  

h     Explain the causes of movements along and shifts in aggregate demand and supply curves;
  

i      Describe how fluctuations in aggregate demand and aggregate supply cause short-run changes in the economy and the business cycle;
  

j      Explain how a short run macroeconomic equilibrium may occur at a level above or below full employment;
  

k      Analyze the effect of combined changes in aggregate supply and demand on the economy;
  

l      Describe the sources, measurement, and sustainability of economic growth;
  

m    Describe the production function approach to analyzing the sources of economic growth;
  

n     Distinguish between input growth and growth of total factor productivity as components of economic growth.

Wendy01

Exercise Problems:
1. In a sample economy with no foreign sector, the following equations apply: Consumption function C=2,500+0.80(Y-T) Investment function I=500+0.30Y-25r Government spending G=1,000 Tax function T=-250+0.30Y Y:Aggregate income    r: Real interest rate If the real interest rate is 3% and government spending increases to 2,000, the increase in aggregate income will be closest to: A. 1,000 B. 1,163 C. 7,143		Ans: C; the aggregate income of an economy is the value of all the payments earned by the suppliers of factors used in the production of goods and services. So here in the beginning, After the change, so the increase of aggregate income is 36,607-29,464=7,143

Wendy01

2. In regard to the aggregate demand curve and an increase in one of its associated factors, which of the following relationships is least accurate? Increase in factor Shifts the AD curve Reason A. Stock prices Rightward Lower investment B. Consumer confidence Rightward Higher consumption C. Exchange rate* Leftward Lower exports and higher imports *Exchange rate is foreign currency per unit of domestic currency

Ans: A; aggregate demand represents the quantity of goods and services that households, business, government, and foreign customers want to buy at any given level of price. So here, increase of stock prices will stimulate investment, and AD curve will shift to right. B is incorrect; increase in consumer confidence will increase consumption, and AD curve moves rightward. C is incorrect; increase of exchange rate means appreciation of domestic currency, so net export will decrease, and AD curve shifts to left.

Wendy01

3. A recessionary gap is more likely to be observed when: A. Real GDP is above potential GDP B. Real GDP is below potential GDP C. Employment is above full-employment equilibrium

Ans: B; the recessionary gap is measured as the amount by which equilibrium output is below potential GDP. So it is observed when real GDP is below than potential GDP.

Wendy01

4. Regarding a company’s production function, both labor costs and capital costs are best described as: A.  fixed in the long run B.  variable in the long run C.  variable in the short run

Ans: B; in short run, labor cost is variable and capital cost is fixed, but in long run, both of the two input are variable.

Wendy01

5. The total output in units and average selling prices in a hypothetical economy producing only two products, X and Y, is provided below: Product X Product Y Year Output (units) Selling Price/unit Output (units) Selling Price/unit 2010 2,800 9 2,000 47 2011 3,000 11 1,800 52 If the implicit price deflator for GDP in 2010 was 100, for 2011 it is closest to: A. 106.2 B. 106.8 C. 113.4

Ans: C; the nominal GDP of 2011 is The real GDP of 2011 is So the GDP deflator is