海南大学：《西方经济学》课程试卷解答（宏观经济学）2007-2008（A）答案.doc_大学文库

海南大学2007-08学年度第2学期《宏观经济学》答案(A卷) Please answer the Questions（每题10分，共同100分) 1.How does Real business cycle theory explains fluctuations in employment? 1.Real business cycle theory explains fluctuations in employ ment through fluctuations in the supply of labor.The theory emphasizes that the quantity of labor supplied depends on the economic incentives that workers face.Intertemporal substitution -that is,the willingness of workers to reallocate their labor over time-is especially rate is temporarily high,for example,it is attractive to work more today relative to tomorrow. 2.What are the four central disagreements in the debate over real business cycle theory? 2.There are four central disagreements in the debate over real business cycle theory These disagreements have not yet been settled,and,as a result,they remain areas of active research.These areas are: i.The interpretation of the labor market.Over the business cycle.the unemploy- widelyAdvoc busines ycl theory believe tuations in employment result from changes in the amount people want to work- by assumption,the economy is always on the labor supply curve.They believe that unemployment statistics are difficult to interpret for at least two reasons:first, people may claim to be unemployed to collect unemployment-insurance benefits; willing to work if they were offered the wage they receive in most years.Critics think tions nmployment on just reflect the amount that people want to work.They believe that the high unemployment rate in recessions suggests that the labor market does not clear-that is,that the wage does not adjust to equilibrate labor supply and labor demand. ii.The importance oftechnology shocks.Real business cycle advocates assume that expe nce fluctua in their ability to produce oods and services from e weather environmental regulations,and oil prices,as well as technology itself.Critics of real business cycle theory ask,"What are the shocks?"It seems likely to them that techlgical progress occurs gradually.Also,these critics question whether of techn ess.The accumulation eems unlikely thatitgonever egre iii.The neutrality of money.Reductions in money growth and inflation are usually associated with periods of high unemployment.Most observers interpret this as evidence that monetary policy has a strong influence on the real economy.Real business cycle theory focuses on nonmonetary(that is,"real"causes of business

海南大学 2007-08 学年度第 2 学期《宏观经济学》答案(A 卷) Please answer the Questions（每题 10 分，共同 100 分） 1.How does Real business cycle theory explains fluctuations in employment? 1.Real business cycle theory explains fluctuations in employment through fluctuations in the supply of labor.The theory emphasizes that the quantity of labor supplied depends on the economic incentives that workers face.Intertemporal substitution —that is, the willingness of workers to reallocate their labor over time—is especially important in determining how people respond to incentives.If today’s wage or interest rate is temporarily high,for example,it is attractive to work more today relative to tomorrow. 2.What are the four central disagreements in the debate over real business cycle theory? 2.There are four central disagreements in the debate over real business cycle theory. These disagreements have not yet been settled,and,as a result,they remain areas of active research.These areas are: i.The interpretation of the labor market.Over the business cycle,the unemployment rate varies widely.Advocates of real business cycle theory believe that fluctuations in employment result from changes in the amount people want to work— by assumption,the economy is always on the labor supply curve.They believe that unemployment statistics are difficult to interpret for at least two reasons:first, people may claim to be unemployed to collect unemployment-insurance benefits; second,the unemployed might be willing to work if they were offered the wage they receive in most years. Critics think that fluctuations in employment do not just reflect the amount that people want to work.They believe that the high unemployment rate in recessions suggests that the labor market does not clear—that is,that the wage does not adjust to equilibrate labor supply and labor demand. ii.The importance of technology shocks.Real business cycle advocates assume that economies experience fluctuations in their ability to produce goods and services from inputs of capital and labor.These fluctuations may arise from the weather, environmental regulations,and oil prices,as well as technology itself. Critics of real business cycle theory ask,“What are the shocks?”It seems likely to them that technological progress occurs gradually.Also,these critics question whether recessions are really times of technical regress.The accumulation of technology may slow down,but it seems unlikely that it goes into reverse. iii.The neutrality of money.Reductions in money growth and inflation are usually associated with periods of high unemployment.Most observers interpret this as evidence that monetary policy has a strong influence on the real economy.Real business cycle theory focuses on nonmonetary(that is,“real”)causes of business

fluctuations,arguing that the close correlation between money and output arises because fluctua ions in output ions in the money supply,not the cadNoeesote。etsCeoyecaraoncao reverse.Her does not affect real variables such as output and employment. iv.The flexibility of wages and prices.Most of microeconomic analysis assumes that prices adjust to equilibrate supply and demand.Advocates of real business cycle theory believe th mists should make the me assu umption.They argue that the stickiness of wages and prices is not important for understanding ec onomic fluctuations.Critics of real business cycle theory point out that many wages and prices are not flexible.They believe that this inflexibility explains both the existence of unemployment and the non-neutrality of money Staggering of price adjustment by individual firms affect the 3.Staggered price adjustment significantly slows the adjustment of the price level after a monetary contraction.When any one firm adjusts its price,that firm will be reluctant pric very much,s large change would alter itsr price(its pric It of these incremental changes is tha firm in the economy has gone through one round of price adjustment,the aggregate price level will not have fully adjusted to its new equilibrium level. 4.Why do many economists project increasing budget deficits and government debt over the next several decades? 4.Many economists project increasing budget deficits and government debt over the next several decades because of changes in the age profile of the population.Life ssteadly nereged and bith rates have fallen.Asa resutthe e oming a larger shar of the population.As more people for"entitlements"of Social Security and Medicare,govemment spending will rise automatically over time.Without changes in tax and expenditure policies,government debt will also rise sharply 5.Describe four problems affecting measurement of the government budget deficit. 5.Standard measures of the budget deficit are imperfect measures of fiscal policy for at least four reasons.First they do not correct for the effects of inflation.The measured deficit should equal the change in the govemment's real debt,not the change in the aldebt Second,such measures donot offset changes in govemment liabilitie with changes in govemment assets.To measure the govemment'soverall indebtedness we should subtract government assets from government debt.Hence,the budget deficit should be measured as the change in debt minus the change in assets.Third,standard measures omit some liabilities altogether such as the pensions of government workers

fluctuations,arguing that the close correlation between money and output arises because fluctuations in output cause fluctuations in the money supply,not the reverse.Hence,advocates of real business cycle theory argue that monetary policy does not affect real variables such as output and employment. iv.The flexibility of wages and prices.Most of microeconomic analysis assumes that prices adjust to equilibrate supply and demand.Advocates of real business cycle theory believe that macroeconomists should make the same assumption.They argue that the stickiness of wages and prices is not important for understanding economic fluctuations.Critics of real business cycle theory point out that many wages and prices are not flexible.They believe that this inflexibility explains both the existence of unemployment and the non-neutrality of money. 3. How does Staggering of price adjustment by individual firms affect the adjustment of the overall price level to a monetary contraction. 3.Staggered price adjustment significantly slows the adjustment of the price level after a monetary contraction.When any one firm adjusts its price,that firm will be reluctant to change its price very much,since a large change would alter its real price(its price relative to other firms).The result of these incremental changes is that even after every firm in the economy has gone through one round of price adjustment,the aggregate price level will not have fully adjusted to its new equilibrium level. 4.Why do many economists project increasing budget deficits and government debt over the next several decades? 4.Many economists project increasing budget deficits and government debt over the next several decades because of changes in the age profile of the population.Life expectancy has steadily increased,and birth rates have fallen.As a result,the elderly are becoming a larger share of the population.As more people become eligible for“entitlements” of Social Security and Medicare,government spending will rise automatically over time.Without changes in tax and expenditure policies,government debt will also rise sharply. 5.Describe four problems affecting measurement of the government budget deficit. 5.Standard measures of the budget deficit are imperfect measures of fiscal policy for at least four reasons.First,they do not correct for the effects of inflation.The measured deficit should equal the change in the government’s real debt,not the change in the nominal debt.Second,such measures do not offset changes in government liabilities with changes in government assets.To measure the government’s overall indebtedness, we should subtract government assets from government debt.Hence,the budget deficit should be measured as the change in debt minus the change in assets.Third,standard measures omit some liabilities altogether,such as the pensions of government workers

effects of the business cycle 6.According to the traditional view of government debt,how does a debt-financed tax cut affect public saving,private saving and national saving? 6.Public saving is the difference betweent xes and goverment purcha s.so a debt financed tax cut reduces public saving by the full amount that taxes fall.The tax cut also increases disposable income.According to the traditional view,since the marginal propensity to consume is between zero and one,both consumption and private saving increase Because consumption rises private saving increases by less than the amount of the tax cut National saving is the sum of public and pri ate g.because public nfalls by more than private saving national ing falls 7.According to the Ricardian view of government debt,how does a debt-financed tax cut affect public saving.private saving.and national saving? 7.According to the Ricardian view,a debt-financed tax cut doe not s stimulate consumption because it does not raise permanent income forward-looking consumers understand that government borrowing today means higher taxes in the future.Because the tax cut does not change consumption,households save the extra disposable income to pay for the future tax liability that the tax cut implies:private e the full ame of the tax cut.This in pr exactly offsets t e decrease in public saving associated with the tax cut.Therefore,the tax cut has no effect on national saving. 8.Describe the possible effects of falling prices on equilibrium income. 4.Falling prices can either increase or decrease equilibrium income.There are two ways in which falling prices can increase income.First,an increase in real money balances shifts the LM curve downward,thereby increasing income. Second,the Is curve shifts to the right because of the Pigou effect:real money balances are part of household wealth,so an increase in real money balanc sumer s feel and buy more. This shifts the IS curve to the right,also increasing income.There are two ways in which falling prices can reduce income.The first is the debt-deflation theorv.An unexpected decrease in the price level redistributes wealth from debtors to creditors.If debtors have a higher propensity to consume than creditors,then this redistribution causes debtors to de thei din thar edito theirs As result,aggregate co sumption falls shifting the IS curve to the left and reducin income.The second way in which falling prices can reduce income is through the effects of expected deflation.Recall that the real interest rate requals the nominal interest rate i minus the expected inflation rate.evervone expects the price level to fall in the future(ie.,ne is negative),then for any given nominal interest

and accumulated future Social Security benefits.Fourth,they do not correct for the effects of the business cycle. 6.According to the traditional view of government debt,how does a debt-financed tax cut affect public saving,private saving,and national saving? 6.Public saving is the difference between taxes and government purchases,so a debtfinanced tax cut reduces public saving by the full amount that taxes fall.The tax cut also increases disposable income.According to the traditional view,since the marginal propensity to consume is between zero and one,both consumption and private saving increase.Because consumption rises,private saving increases by less than the amount of the tax cut.National saving is the sum of public and private saving;because public saving falls by more than private saving increases,national saving falls. 7.According to the Ricardian view of government debt,how does a debt-financed tax cut affect public saving,private saving,and national saving? 7.According to the Ricardian view,a debt-financed tax cut does not stimulate consumption because it does not raise permanent income—forward-looking consumers understand that government borrowing today means higher taxes in the future.Because the tax cut does not change consumption,households save the extra disposable income to pay for the future tax liability that the tax cut implies:private saving increases by the full amount of the tax cut.This increase in private saving exactly offsets the decrease in public saving associated with the tax cut.Therefore,the tax cut has no effect on national saving. 8.Describe the possible effects of falling prices on equilibrium income. 4.Falling prices can either increase or decrease equilibrium income.There are two ways in which falling prices can increase income.First,an increase in real money balances shifts the LM curve downward,thereby increasing income. Second, the IS curve shifts to the right because of the Pigou effect:real money balances are part of household wealth, so an increase in real money balances makes consumers feel wealthier and buy more. This shifts the IS curve to the right,also increasing income. There are two ways in which falling prices can reduce income.The first is the debt-deflation theory.An unexpected decrease in the price level redistributes wealth from debtors to creditors.If debtors have a higher propensity to consume than creditors, then this redistribution causes debtors to decrease their spending by more than creditors increase theirs. As a result,aggregate consumption falls, shifting the IS curve to the left and reducing income. The second way in which falling prices can reduce income is through the effects of expected deflation.Recall that the real interest rate requals the nominal interest rate i minus the expected inflation rate. everyone expects the price level to fall in the future(i.e.,πe is negative),then for any given nominal interest