True or False (answers only)

1.The key deterrent of wage flexibility are the frictions in the labour market.

2.In the Cramer's rule, the determinant of A matrix is never used.

3.Normally, it is possible to generate long-run economic growth with investment policy.

4.At best, the total factor productivity can be estimated, but is unobserved in data.

5.In fixed exchange rate system, inflation is controlled through exchange rate policy.

6.The direct effect of COVID19 on any economy would be reduced capital productivity.

7.Inflation expectations guide the stance of monetary policy in the short run.

8.The short run aggregate supply can be understood using Phillips curve.

9.If CF = CF0+0.25(id, if), was can say that CF0 is the value of foreign investment.

10.In small Pacific Island economies (like Kiribati), monetary policy works best

11.In the Keynesian world, an expansionary fiscal policy would always crowd-out private investment, if monetary policy not accommodative.

12.In a liquidity trap situation, monetary policy is totally ineffective.

13.When LM = 0.5Y-50i (where Y = 5000, i= 5%), the real money supply should be 2250

14.The AD curve is a locus of points of simultaneous equilibria of goods and money markets.

15.In a flexible exchange rate system, with perfect capital mobility, a devaluation will increase GDP but interest rate will remain unchanged

16.The biggest policy challenge for most countries now is managing economic contraction.

17.COVID19 crisis has reduced trade to/from the Pacific region.

18.The following are constraints for economic development in Samoa: subsistence agriculture, limited tourism and lack of domestic private investment.

19.If I = I0-bi, then the value of b will determine the impact of monetary policy on investment.

20.In order to reduce market interest rate, the central bank conducts open market sale of bonds.

21.Under perfect capital mobility, interest rates (id, if) can permanently vary, if monetary policy is tightened

22.The degree of capital mobility could be impacted by differences in income tax regimes

23.A devaluation can cause inflation and lead to a raise in external debt.

24.A BOP surplus will increase foreign reserves is the domestic economy operates under flexible exchange rate system.

25.If nominal GDP was 1500 and real was 1450, the implicit GDP deflator would imply a moderate rate of inflation of about 3%.

26.If the goods market equilibrium was Y = 2500-50i, and government expenditure was increased by 50, a possible new IS curve would be Y = 2750-50i, provided G was 2.5.

27.The aggregate expenditure multiplier in ADAS is larger than that of the ISLM model.

28.The markets involved in IS-LM are goods and money markets

29.The rate of interest (i) is determined in the bonds market

30.A possible expression that can model government spending is G = Gt-1 where (t) is current year.

31.A devaluation will improve current account balance sustainably in the long-run

32.As foreign prices raise, we expect domestic exports to increase; and if domestic prices raise, the exports to decline

33.In a typical fixed exchange rate system, the money supply is less independently controlled by the central bank

34.Despite different last-two digits of yours and your friend's ID numbers, if IS = 20XX-150i and LM = 5XX+20i, the value if i and Y will be same if both XX stands for the last two digits of any one's number. (XX is 05)