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GK
GK Set-1
Economics
Macro Economics
48

Macro Economics MCQ (GK Set-1) with Answers

48) The difference between a nation’s current account surplus and its primary account surplus is its

net asset position with respect to the rest of the world

net investment income from abroad

balance of payments

net sovereign borrowing

Answer is:

net investment income from abroad

Macro Economics MCQ (GK Set-1) with Answers

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Related Macro Economics MCQ (GK Set-1) with Answers

49) If, for Crusoe’s current intertemporal consumption pattern (satisfying his intertemporal budget constraint), his marginal rate of intertemporal substitution is 1 and the real rate of interest is positive, then

the interest rate will fall to zero.

Crusoe could increase his lifetime utility by consuming more today.

Crusoe could increase his lifetime utility by consuming less today

Crusoe is necessarily a borrower

Answer is:

Crusoe could increase his lifetime utility by consuming less today

50) What is the permanent income that corresponds to present value of the two-period-income path Y1=100, Y2=125 for the real interest rate r=.5?

110

112

114

116

Answer is:

110

51) Crusoe begins with an endowment A. Point R is the consumption combination he would choose at real interest rate r and point R is the consumption combination he would choose at real interest rate r. Which of the following statements is true?

Crusoe is a lender today

Crusoe’s wealth has decreased because of the change in the real interest rate

The marginal rate of intertemporal substitution at R is equal to r.

The change in interest rate does not decrease Crusoe’s utility since he is free to keep his original endowment A if he so chooses

Answer is:

Crusoe’s wealth has decreased because of the change in the real interest rate

52) There are strong theoretical reasons to expect that changes in wealth are responsible for changes in consumption. Nonetheless, one reason that we observe a tight link between consumption and disposable income is

credit rationing which changes the intertemporal budget constraint for borrowers

households attempt to smooth their consumption

household saving provides a buffer between income and expenditure

Ricardian equivalence

Answer is:

credit rationing which changes the intertemporal budget constraint for borrowers

Macro Economics MCQ (GK Set-1) with Answers

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