ECS 2602 Questions and ans exam prep

2018/1 1.1 Which one of the following statements is not a macroeconomic issue? 1. The unemployment rate in South Africa, according to the strict definition, was 26,6% in 2016. 2. The drought experienced in 2015/16 reduced many crop harvests and caused food price inflation in South Africa. 3. The annual inflation rate in South Africa rose from 2015 to 2016. 4. Because of high inflation, it is expected that the interest rate will increase. 5. The drought experienced in 2015/16 reduced the total maize crop harvested and caused the price of maize in South Africa to rise. 2018/2 2.1 Which of the following statements are correct? a. In macroeconomics we focus on the determination of the demand for and supply of individual goods and the determination of their prices. b. The impact of fiscal and monetary policy on the level of output and income is an important topic in this module. c. If the population of South Africa grows at 5% per year and the economic growth rate is 3% per year, a decline in the real GDP per capita occurs. d. Expansionary monetary policy during a recession is an example of stabilisation policy. e. An expansionary fiscal policy implies a decrease in government spending and/or an increase in taxation. 1. a, b and c 2. b, c and d 3. b, d and e 4. Only b and c 5. b, c and e Test Bank 1. Which of the following statements is/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 form part of the supply side analysis and are therefore excluded from this module. b) The two most important accounts of the balance of payments are the current account and the financial account. c) If total output decreases with 2% during a specific year and the general price level increases with 4% the real GDP will decrease and the nominal GDP will increase. 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 t o 4 2018/1 1.2 Which of the following would be included in the calculation of gross domestic product (GDP) of South Africa? a. A citizen from Zimbabwe (foreign country) earns a wage at a gold mine in South Africa. b. A farmer from Gauteng (South Africa) buys his neighbour's tractor. c. Ford Motor Company of America builds an assembly plant in the Eastern Cape (South Africa). d. Exports of agricultural products to Britain. e. Imports of motorcars from Japan to South Africa. 1. a, b, c, d and e 2. Only a, c and d 3. Only b, c and e 4. Only a and c 5. Only b and e 2018/1 1.3 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. Test Bank Which of the following statements are correct? If the marginal propensity to save increases in the goods market model … a. it implies that households save a larger proportion of a change (or increase) in their income. b. it implies a decrease in the marginal propensity to consume. This decrease in the marginal propensity to consume leads to a decline in consumption spending. A decline in consumption spending in return causes the demand for goods to decrease and eventually output and income decline. c. investment spending will increase. d. investment spending will be unchanged since investment spending is not a function of savings. It is an exogenous variable and is determined by factors such as the interest rate, expectations, access to credit and confidence and is therefore unchanged. 1) a, b and c 2) b and d 3) Only b and c 4) a, b and d 5) Only a and d 2018/2 1.2 Which of the following are exogenous variables in the consumption function C = c0 + cYD? a. The level of output and income. b. Marginal propensity to consume. c. Autonomous consumption. d. Consumption spending. 1. a, b and c 2. b, c and d 3. a and d 4. b and c 5. Only b 2018/2 1.5 Autonomous consumption will ________________ while induced consumption is influenced by _________________. 1. decrease if income decreases the level of disposable income 2. increase if income increases non-income determinants of consumer spending 3. remain unchanged the level of disposable income 2018/1 1.4 2018/2 The difference between expenditure on the gross domestic product (GDP) and gross domestic expenditure (GDE) is that … 1. expenditure on the GDP includes both imports and exports, while GDE includes exports and excludes imports. 1.3 2021/1 1.4 2. expenditure on the GDP includes exports and excludes imports, while GDE includes both imports and exports. 3. expenditure on the GDP includes exports and excludes imports, while GDE includes imports and excludes exports. 4. expenditure on the GDP includes imports and excludes exports, while GDE includes exports and excludes imports. 2018/2 1.7 Which of the following statements are correct? a. Real output and income and real GDP mean the same in our goods market model. b. In the consumption function C = c0 + cYD; a change in autonomous consumption changes the vertical intercept and the C curve shifts, while a change in marginal propensity to consume changes the slope of the C curve. c. Using the goods market model; if the government decreases taxes by R20 million, consumer spending increase by more than R20 million. d. In the equation C = c0 + cYD, c0 represents that part of consumption that is not influenced by income. 1. a, b, c and d 2. Only a, b and d 3. Only c and d 4. Only a, c and d 5. Only a and d Test Bank 6. Which of the following is/are correct in terms of the goods market model? a. Autonomous consumption is represented by c0 + Ī + G – cT. b. Induced consumption is presented by cYD. c. The demand for goods determines the amount of goods that producers produce and they will only change their production if the demand for goods changes. d. Equilibrium is presented by Y = c0 + c(Y−T) + Ī + G. 1) a, b, c and d 2) Only a, b and d 3) Only a, c and d 4) Only a, b and c 5) Only b, c and d Test Bank 3. Which of the following statements with regards to the following consumption function? C = c0 + cYD is/are correct? a. A change in the marginal propensity to consume will result in a change in income. b. If autonomous consumption should be zero consumption will be equal to cYD. c. A change in autonomous consumption will cause a change in marginal propensity to consume. 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 2018/1 1.5 Expenditure on the gross domestic product is … ing on goods and services produced inside the borders of a country, including imports and excluding exports. ing on goods and services produced inside the borders of a country, excluding imports and including exports. c. the same as the demand for domestic goods. same as the domestic demand for goods. 1. a and c 2. a and d 3. b and c 4. b and d