compito macro

hello!ecco il compito di macro di oggi:
Macroeconomics Academic Year 2008-09
Exam - December 11, 2008
Questions
1. Explain what are the components of money supply, and what is the relationship with the monetary base.
2. Consider a version of the income-expenditure model (closed economy) in which consumption is described by the usual function C = C + cYd, taxes are proportional to domestic income (with a marginal rate equal to t), and transfers depend negatively on inccime (because of the presence of counter-cyclical unemployment subsidies) according to the function Tr = Tr — bY, where b is a positive coefficient. Write down the multiplier formula of this model. If the government increases the autonomous component of subsidies (that is, the value of Tr), what happens to the equilibrium level of domestic product? And what happens if the government, instead, increases the sensitivity of subsidies with respect to income (that is, it increases the value of parameter b)?
3. Consider a regime with flexible exchange rates and perfect capital mobility. Firms’ expectations regarding their investment projects become more optimistic.What is the effect on domestic product? Briefly explain your results.
4. Explain what is the AD schedule, and how it can be derived.
5. Write down the Keynesian version of the AS schedule in logarithms, and use it to illustrate the theory of cost inflation.
6. How can output fluctuations be explained in a “pure” neoclassical model? Which stylized fact is in contrast with such an explanation?
University of Rome “Tor Vergata”
School of Economics EEBL

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