📖 宏观经济学综合练习

Economics

I. Lesson Focus

This lesson integrates all major macroeconomic concepts covered in the CFA Level I curriculum. Candidates must apply the AD-AS model, monetary and fiscal policy transmission mechanisms, economic growth theory, Phillips curve analysis, balance of payments, and exchange rate determination to complex scenarios. Emphasis is placed on distinguishing short-run versus long-run effects, identifying policy limitations, and calculating economic impacts using core formulas.

II. The Problem

A country is simultaneously experiencing a slowdown in potential growth, widening fiscal deficits, quantitative easing by the central bank, a sharp rise in imported raw material prices, and persistent depreciation of its currency. Analysts must determine the direction of shifts in aggregate demand and aggregate supply curves, compare short-term and long-term policy outcomes, assess changes in the slope of the Phillips curve, evaluate balance of payments account effects, and differentiate between real and nominal GDP. Such integrated questions are frequent on the CFA Level I exam and test whether candidates can synthesize knowledge across all macroeconomic topics.

III. Core Framework Review of Macroeconomics

Macroeconomics studies the economy as a whole, focusing on aggregate output, employment, price levels, and economic growth. The primary analytical tool is the aggregate demand–aggregate supply (AD-AS) model.

The aggregate demand (AD) curve slopes downward due to: - Wealth effect - Interest rate effect - International trade effect

Aggregate supply (AS) is divided into short-run aggregate supply (SRAS, upward-sloping) and long-run aggregate supply (LRAS, vertical at potential output).

When the economy is in long-run equilibrium, actual output equals potential output and the unemployment rate equals the natural rate of unemployment.

IV. Transmission Mechanisms of Monetary and Fiscal Policy

Expansionary monetary policy (lower interest rates, increased money supply): - Short run: AD shifts right, output rises, price level increases - Long run: Only the price level rises; output returns to potential (monetary neutrality)

Expansionary fiscal policy (increased government spending or tax cuts): - Short run: AD shifts right - Crowding-out effect occurs as government borrowing pushes up interest rates and reduces private investment - Long-run multiplier is smaller than the short-run multiplier

V. Economic Growth and the Production Function

Sources of economic growth: 1. Increase in quantity of labor 2. Increase in capital stock 3. Improvement in total factor productivity (TFP)

Cobb-Douglas production function: $Y = A K^\alpha L^{1-\alpha}$

where A represents technology level and α is capital’s share of output (typically ≈0.3).

Increases in capital per worker create capital deepening, but diminishing marginal returns imply that long-run growth ultimately depends on technological progress.

VI. Unemployment, Inflation, and the Phillips Curve

Natural unemployment rate = Frictional unemployment + Structural unemployment

Cyclical unemployment = Actual unemployment rate − Natural rate

The short-run Phillips curve (SRPC) slopes downward, showing a negative relationship between inflation and unemployment.

The long-run Phillips curve (LRPC) is vertical at the natural unemployment rate, indicating no long-run trade-off.

Supply shocks (e.g., oil price spikes) cause stagflation: high inflation and high unemployment simultaneously. This occurs when SRAS shifts left.

VII. Balance of Payments and Exchange Rate Determination

The balance of payments includes: - Current account (CA): Trade balance + Net income + Net transfers - Capital and financial account (KA)

Under floating exchange rates, the exchange rate is determined by supply and demand for foreign exchange. Currency depreciation improves the current account (subject to possible short-term J-curve deterioration).

Purchasing power parity (PPP): In the long run, exchange rates should reflect inflation differentials. $$\%\Delta S \approx \pi_{domestic} - \pi_{foreign}$$

Interest rate parity (IRP): Currencies with higher interest rates tend to appreciate.

Worked Cases

Case 1: AD-AS Model under a Supply Shock

A country experiences a sudden 30% increase in imported oil prices while initially at long-run equilibrium.

Analysis: - SRAS shifts left - Short-run outcome: Real GDP falls, price level rises (stagflation) - Long run without intervention: SRAS gradually shifts right back to LRAS; higher price level, output returns to potential - If the central bank expands money supply: AD shifts right, inflation worsens but output recovers faster in the short run

Calculation: Potential GDP = 100 billion. The shock reduces short-run GDP to 95 billion and raises the price level from 100 to 112. To restore GDP to 100 billion, the central bank must shift AD right, pushing the price level further to 125.

Case 2: Fiscal Policy and the Crowding-Out Effect

The government increases infrastructure spending by 10 billion. Marginal propensity to consume (MPC) = 0.8. Money demand is highly sensitive to interest rates.

Calculation: Simple multiplier = $1 / (1 - MPC) = 5$ Theoretical GDP increase = 50 billion Due to crowding-out, higher interest rates reduce private investment by 3 billion. Actual GDP increase ≈ 35 billion.

In the long run, higher government debt may raise real interest rates, reducing capital accumulation and lowering the potential growth rate by 0.2 percentage points.

Case 3: Exchange Rates and Balance of Payments

Country A has a current account deficit of 6% of GDP and a capital account surplus of 4%. The currency floats freely.

Analysis: - Overall balance of payments deficit of 2% creates downward pressure on the currency - Raising interest rates to attract capital widens the capital surplus, appreciates the currency, and may worsen the current account further (inconsistent with long-run equilibrium) - Long-run equilibrium requires current + capital account ≈ zero - With domestic inflation at 6% and foreign inflation at 2%, relative PPP implies the currency should depreciate approximately 4% per year

Traps

Key Formulas

• Expenditure multiplier = $1 / (1 - MPC)$
• Money multiplier ≈ $1 / Reserve\ Requirement$
• Real GDP growth ≈ Nominal GDP growth − Inflation rate
• Unemployment rate = $(Unemployed / Labor\ Force) \times 100\%$
• Relative PPP: $\%\Delta S \approx \pi_d - \pi_f$
• Short-run Phillips curve: $\pi = \pi^e - b(U - U^*) + \text{supply shock}$
• Cobb-Douglas: $Y = A K^{0.3} L^{0.7}$
• Potential output growth = Labor force growth + (Capital growth × 0.3) + TFP growth

Practice Questions

Q1. Following a positive aggregate supply shock while starting from long-run equilibrium, the most likely outcome is:
A. Higher price level and higher real output
B. Lower price level and higher real output
C. Higher price level and unchanged real output
D. Lower price level and unchanged real output

Q2. Which of the following is most likely to shift the long-run Phillips curve to the right?
A. Expansionary monetary policy
B. An increase in the natural unemployment rate
C. An increase in cyclical unemployment
D. A decline in inflation expectations

Q3. If a country’s money supply growth persistently exceeds its nominal GDP growth, the quantity theory of money most likely predicts:
A. Rapid real GDP growth
B. Deflation
C. Inflation
D. Unemployment falling below the natural rate

Q4. When government spending increases while the central bank holds interest rates constant, the most likely result is:
A. Complete crowding-out
B. Partial crowding-out
C. Crowding-in
D. Zero multiplier effect

Q5. Real GDP is 1,050 billion, potential GDP is 1,000 billion, natural unemployment is 5%, and current unemployment is 3%. The economy is experiencing:
A. A recessionary gap
B. An inflationary gap
C. Long-run equilibrium
D. Stagflation

Q6. According to relative purchasing power parity, if domestic inflation is 8% and foreign inflation is 3%, the expected annual depreciation of the domestic currency is closest to:
A. 3%
B. 5%
C. 8%
D. 11%

Q7. Which of the following is most likely to cause a leftward shift in the short-run aggregate supply curve?
A. Higher labor productivity
B. Lower nominal wages
C. A large increase in imported raw material prices
D. Optimistic business expectations about future demand

Q8. Under a floating exchange rate regime, a country with a persistent current account deficit will most likely experience:
A. Currency appreciation
B. Currency depreciation
C. Permanently lower domestic interest rates
D. A permanent capital account deficit

Answers

Takeaways

• Long-run monetary neutrality: monetary policy affects only the price level, not real output
• Fiscal policy is subject to crowding-out; actual multipliers are smaller than simple Keynesian multipliers
• The long-run Phillips curve is vertical at the natural unemployment rate; no permanent inflation-unemployment trade-off exists
• Supply shocks shift SRAS and can produce stagflation; policy responses must differentiate demand versus supply origins
• Exchange rates are jointly determined by relative inflation, interest rate differentials, and balance of payments flows
• Real GDP, not nominal GDP, measures true economic growth by removing price effects
• Sustainable long-run growth ultimately depends on total factor productivity improvements rather than capital deepening alone
• The AD-AS framework integrates fiscal, monetary, growth, unemployment, inflation, and international concepts into a unified analytical tool