List of top Macroeconomics Questions on Macroeconomics asked in GATE XH-C1

A labour-augmenting production function is \(Y = K^{0.33}(AL)^{0.67}\). Given growth rates: \(g_L=1.2%\), \(g_K=3%\), \(g_A=1.5%\). Using growth accounting, the growth rate of \(Y\) per annum is ____________ (round off to two decimal places).

Stagflation is a situation when

Consider the Keynesian consumption function $C=\alpha+\beta Y$, where $C$ is aggregate consumption, $Y$ is aggregate income, $\alpha>0$ is a constant, and $\beta$ is the marginal propensity to consume $(0<\beta<1)$. Then, the average propensity to consume is

In the context of endogenous growth theory, the Nobel laureate Paul Romer emphasized that “ideas” are

In the Keynesian Cross (zero tax), government purchase rises from ₹ 100 to ₹ 125 and equilibrium income increases from ₹ 1300 to ₹ 1400. Using this, the marginal propensity to consume (round off to two decimals) is ____________.

Let \(\pi^e\) be the expected inflation rate, \(i\) be the nominal interest rate and \(r\) be the real interest rate. Which of the following statements is/are correct?

Which of the following models explain(s) the upward-sloping aggregate supply curve in the short-run?

Suppose \( \alpha \) is a real number between 0 and 1. Rohit is choosing \( x \) and \( y \) to maximize the following utility function: \[ U(x, y) = x^2 + 2xy + y^2 + 4\alpha^2 + 8\alpha + 10 \] subject to the following constraints: \[ 2x + y = 10, \quad x, y \geq 0. \] Then the optimal value of \( y \) chosen by Rohit is _________ (in integer).

Suppose an investigator has specified the following simultaneous equation model:
\[ y_{1,t} = \alpha_{1,0} + \alpha_{1,2} y_{2,t} + \alpha_{2} M_{t} + \alpha_{3} K_{t} + u_{t} \tag{1} \] \[ y_{2,t} = \alpha_{2,0} + \alpha_{2,1} y_{1,t} + \alpha_{3} I_{t} + v_{t} \tag{2} \] where \( y_{1,t} \) and \( y_{2,t} \) are endogenous variables. \( M_t, K_t, I_t \) are predetermined variables. \( u_t \) and \( v_t \) are residual terms. Based on the order condition of identification, which one of the following statements is correct?

A monopolist faces the following inverse demand function: \[ P = 40 - Q \] where \(P\) denotes price and \(Q\) denotes quantity. The monopolist has zero fixed cost and a marginal cost of 5 per unit of output produced. The monopolist aims to maximize profit. Suppose the government imposes a tax of 5 per unit of output on the monopolist. As a result, the price charged by the profit-maximizing monopolist to the consumer increases by:

Consider a two-period consumption model in which a representative household lives for two periods only. In period 1, he earns income \(y_1\) and consumes \(c_1\). In period 2, he earns \(y_2\) and consumes \(c_2\). He can borrow and lend at the same rate of interest (\(r\)). His lifetime utility function is as follows: \[ U(c_1, c_2) = \ln(c_1) + \beta \ln(c_2) \] where \(\beta>0\) measures the sensitivity of future period’s consumption. What will be the marginal propensity to consume of current consumption, i.e. \(\frac{\partial c_1}{\partial y_1}\)?

Okun’s law says that a 1% increase in unemployment for one year is associated with a 2% decrease in GDP growth. Suppose an economy has the following expectations augmented Phillips curve: \[ \pi = \pi^e - \beta (U - U^N), \quad \beta>0 \] where \( \pi \) and \( \pi^e \) are the inflation and expected inflation rates, respectively. \( U \) and \( U^N \) are the unemployment and natural rate of unemployment, respectively. \( \beta \) measures sensitivity of inflation to unemployment gap. When \( \beta = 2 \), by what percentage does output fall short of full-employment given that the inflation rate, expected inflation rate, and natural rate of unemployment are 8%, 10%, and 6%, respectively?

Which among the following Gini coefficients exhibits the highest equality?

Consider the following system of equations in three variables \(x, y, z\): \[ -x - y - z = 3 \] \[ x + y + z = 10 \] \[ 2x - 3y = 6 \] This system of equations has

Which of the following models appropriately explains the fluctuations in potential output and long-run aggregate supply by understanding the shocks to productivity or the willingness of the worker?