Test Bank

Define the following term

1) Macro economics
2) Endogenous variable
3) Exogenous variable
4) Gross Domestic Product (GDP)
5) The consumer price index (CPI)
6) Real GDP
7) GDP deflator
8) GNP
9) CPI
10) Core inflation
11) Facto of production.
12) Marginal propensity to consume
13) Nominal interest rate
14) Real interest rate
15) National savings
16) Public saving
17) Private saving
18) Money
19) Fiat Money
20) transactions velocity of money
21) Seigniorage
22) Ex Ante versus Ex Post Real Interest Rates.
23) Hyper inflation
24) Nominal Exchange rate , and Real Exchange rate

Essay Questions :
1- Discuss the rules for computing GDP.
2- Distinguish between CPI Versus the GDP Deflator
3- How is National Income Distributed to the Factors of Production?
4- Prove that Capital income/ labor income = α/(1- α)
5- Briefly discuss consumption function
6- Give an account on Investment function.
7- Write short notes on The Supply and Demand for Loanable Funds.
8- Explain the Effects of Fiscal Policy like Increase in government Purchases or
decrease in Taxes.
9- Give hints on functions of money.
10- Money supply vs. monetary policy.
11- The Quantity Theory of Money and money demand function.
 12- Suppose that an economy’s production function
is Cobb–Douglas with parameter α = 0.3.
a. What fractions of income do capital and labor receive?
b. Suppose that immigration increases the labor force by 10 percent. What happens
to total output (in percent)? The rental price of capital? The real wage?
c. Suppose that a gift of capital from abroad raises the capital stock by 10 percent.
What happens to total output (in percent)? The rental price of capital? The real
wage?

13- Illustrate The Fisher Effect to distinct between the real and nominal rate of
interest.
14- Explain in details the Cost of Holding Money.
15- How Policies Influence the Trade Balance?
16- Discuss the consequences of Fiscal Expansion in a Small Open Economy.
17- Give an account on Appreciation and Depreciation of Exchange rate.
18- How fiscal Policies at home Influence the Real Exchange Rate?
19-