This assignment contributes 20% towards your semester mark. Please ensure that this assignment reaches the
university before the due date.
Answer all questions on a mark-reading sheet.
1. Which of the following statements are correct?
a. In this module we only study the demand side of the economy, which includes the goods market and the financial
market. The labour market forms part of the supply side analysis and is therefore excluded from this module.
b. Gross domestic product (GDP) is the total value of all goods and services produced within the boundaries of a
country in a particular period.
c. If total nominal output increases by 2% during a specific year and the general price level increases by 4% the real
GDP will decrease and the nominal GDP will increase.
d. The impact of fiscal and monetary policy on the level of output and income is an important topic in this module.
e. An expansionary monetary policy entails an increase in the interest rate to bring about a decrease in the money
supply in order to decrease the demand for goods in the economy.
1. a, b, c and d
2. Only b, d and e
3. Only a, c and d
4. Only c and d
5. Only b, c and d
2. Which of the following statements are correct?
a. Expansionary monetary policy during a recession is an example of stabilisation policy.
b. The main instrument of fiscal policy is the budget, while the main policy variable is the interest rate.
c. A contractionary monetary policy implies a decrease in government spending and an increase in taxation.
d. An increase is taxes implies the implementation of an expansionary fiscal policy.
e. A decrease in the money supply implies the implementation of a contractionary monetary policy.
1. a, b and e
2. b, c, d and e
3. Only a and b
4. a, d and e
5. Only a and e
3. Gross domestic expenditure (GDE), which is the total value of spending on final goods and
services within the borders of a South Africa …
1. includes imports but excludes exports.
2. excludes exports but includes imports.
3. includes both imports and exports.
4. excludes both imports and exports.
5 Gross domestic product (GDP) …
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, 4. Gross domestic product (GDP) …
a. is the total value of all goods and services produced within the boundaries of a country in a particular period.
b. can be measured in real terms and is therefore a measure of economic growth.
c. is also known as output, production and income.
d. includes imports and excludes exports.
1. a, b and c
2. b, c and d
3. Only a and b
4. a, c and d
5. Only b and c
5. An autonomous (or exogenous) variable in our model means that the variable …
a. is not influenced by the level of output and income in the economy.
b. is determined by exogenous factors such as business confidence, regulations and political influences.
c. is influenced by the level of output and income in the economy.
d. increases or decreases if income in the economy increases or decreases.
1. Only a
2. Only b
3. Only c
4. Only d
5. a and b
6. Which of the following are endogenous variables in the goods market model?
1. The level of output and income and investment spending.
2. Marginal propensity to consume and the level of output and income.
3. The level of output and income.
4. Investment spending.
7. Which of the following is true in terms of consumer spending?
a. An increase in the marginal propensity to consume will change the vertical intercept of the consumption function.
b. Autonomous consumption decreases if the availability of credit decreases.
c. The equilibrium level of output and income will decrease if the marginal propensity to save decreases.
1. a, b and c
2. Only a and b
3. Only a and c
4. Only b and c
5. None of the options 1 to 4 is correct
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university before the due date.
Answer all questions on a mark-reading sheet.
1. Which of the following statements are correct?
a. In this module we only study the demand side of the economy, which includes the goods market and the financial
market. The labour market forms part of the supply side analysis and is therefore excluded from this module.
b. Gross domestic product (GDP) is the total value of all goods and services produced within the boundaries of a
country in a particular period.
c. If total nominal output increases by 2% during a specific year and the general price level increases by 4% the real
GDP will decrease and the nominal GDP will increase.
d. The impact of fiscal and monetary policy on the level of output and income is an important topic in this module.
e. An expansionary monetary policy entails an increase in the interest rate to bring about a decrease in the money
supply in order to decrease the demand for goods in the economy.
1. a, b, c and d
2. Only b, d and e
3. Only a, c and d
4. Only c and d
5. Only b, c and d
2. Which of the following statements are correct?
a. Expansionary monetary policy during a recession is an example of stabilisation policy.
b. The main instrument of fiscal policy is the budget, while the main policy variable is the interest rate.
c. A contractionary monetary policy implies a decrease in government spending and an increase in taxation.
d. An increase is taxes implies the implementation of an expansionary fiscal policy.
e. A decrease in the money supply implies the implementation of a contractionary monetary policy.
1. a, b and e
2. b, c, d and e
3. Only a and b
4. a, d and e
5. Only a and e
3. Gross domestic expenditure (GDE), which is the total value of spending on final goods and
services within the borders of a South Africa …
1. includes imports but excludes exports.
2. excludes exports but includes imports.
3. includes both imports and exports.
4. excludes both imports and exports.
5 Gross domestic product (GDP) …
Page 1 of 11
, 4. Gross domestic product (GDP) …
a. is the total value of all goods and services produced within the boundaries of a country in a particular period.
b. can be measured in real terms and is therefore a measure of economic growth.
c. is also known as output, production and income.
d. includes imports and excludes exports.
1. a, b and c
2. b, c and d
3. Only a and b
4. a, c and d
5. Only b and c
5. An autonomous (or exogenous) variable in our model means that the variable …
a. is not influenced by the level of output and income in the economy.
b. is determined by exogenous factors such as business confidence, regulations and political influences.
c. is influenced by the level of output and income in the economy.
d. increases or decreases if income in the economy increases or decreases.
1. Only a
2. Only b
3. Only c
4. Only d
5. a and b
6. Which of the following are endogenous variables in the goods market model?
1. The level of output and income and investment spending.
2. Marginal propensity to consume and the level of output and income.
3. The level of output and income.
4. Investment spending.
7. Which of the following is true in terms of consumer spending?
a. An increase in the marginal propensity to consume will change the vertical intercept of the consumption function.
b. Autonomous consumption decreases if the availability of credit decreases.
c. The equilibrium level of output and income will decrease if the marginal propensity to save decreases.
1. a, b and c
2. Only a and b
3. Only a and c
4. Only b and c
5. None of the options 1 to 4 is correct
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