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 forms part of supply side analysis and is 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 increases with 3% during a specific year and the general price level increases with 5% the real GDP
will decrease and the nominal GDP will increase.
d. Fiscal policy deals with government spending and taxes while monetary policy deals with money supply.
1. a, b, c and d
2. Only a, b and d
3. Only b, c and d
4. Only b and d
5. None of the options 1 to 4
The correct option is 3. Statement a is incorrect. In this module we study both the demand and supply side of the macro
economy. Statement b is correct. Statement c is correct. If the rise in the general price level is more that the rise in nominal
production (or output) then the real production (GDP) declines while the nominal production (GDP) increases. Statement d is
correct.
2. Consider the consumption functions of country A and country B.
Country A: C = 1 500 + 0.6YD
Country B: C = 1 000 + 0.9YD
Which of the following statements are correct?
a. In country A autonomous consumption is higher than in country B.
b. In country B induced consumption is definitely higher than in country A.
c. In country B total consumption is definitely higher than in country A.
d. In country A 60 cents out of each rand is spent by the consumers while in country B 90 cents out of each rand is
spent.
1. a, b and d
2. Only a and b
3. a and c
4. Only a and d
5. b, c and d
QUESTIONS 2 TO 20 ARE BASED ON LEARNLING UNIT 2 OF THE STUDY GUIDE
The correct option is 4. Statement a is correct. In country A autonomous consumption is 1 500 while in country B it is 1 000. It
is therefore higher in country A. Statement b is incorrect. Induced consumption is that part of consumption that depends on
income. To know what the induced consumption is we need not only to know what the marginal propensity to consume is but
also what the disposable income is. We can therefore not conclude that it is definitely higher in country B. Statement c is
incorrect. What total consumption is will depend on what the level of disposable income is. Since we do not know what the
level of disposable income is, we do not know what the total consumption is. Statement d is correct since c = 0.6.
3. Which of the following events chain(s) is/are correct regarding the goods market model?
a. Y↑ → G↑
b. Y↑ → I↑
c. Y↓ → T↓
d. Y↓ → C↓
1. Only a
2. Only b
3. Only c
4. Only d
5. b and d
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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 supply side analysis and is 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 increases with 3% during a specific year and the general price level increases with 5% the real GDP
will decrease and the nominal GDP will increase.
d. Fiscal policy deals with government spending and taxes while monetary policy deals with money supply.
1. a, b, c and d
2. Only a, b and d
3. Only b, c and d
4. Only b and d
5. None of the options 1 to 4
The correct option is 3. Statement a is incorrect. In this module we study both the demand and supply side of the macro
economy. Statement b is correct. Statement c is correct. If the rise in the general price level is more that the rise in nominal
production (or output) then the real production (GDP) declines while the nominal production (GDP) increases. Statement d is
correct.
2. Consider the consumption functions of country A and country B.
Country A: C = 1 500 + 0.6YD
Country B: C = 1 000 + 0.9YD
Which of the following statements are correct?
a. In country A autonomous consumption is higher than in country B.
b. In country B induced consumption is definitely higher than in country A.
c. In country B total consumption is definitely higher than in country A.
d. In country A 60 cents out of each rand is spent by the consumers while in country B 90 cents out of each rand is
spent.
1. a, b and d
2. Only a and b
3. a and c
4. Only a and d
5. b, c and d
QUESTIONS 2 TO 20 ARE BASED ON LEARNLING UNIT 2 OF THE STUDY GUIDE
The correct option is 4. Statement a is correct. In country A autonomous consumption is 1 500 while in country B it is 1 000. It
is therefore higher in country A. Statement b is incorrect. Induced consumption is that part of consumption that depends on
income. To know what the induced consumption is we need not only to know what the marginal propensity to consume is but
also what the disposable income is. We can therefore not conclude that it is definitely higher in country B. Statement c is
incorrect. What total consumption is will depend on what the level of disposable income is. Since we do not know what the
level of disposable income is, we do not know what the total consumption is. Statement d is correct since c = 0.6.
3. Which of the following events chain(s) is/are correct regarding the goods market model?
a. Y↑ → G↑
b. Y↑ → I↑
c. Y↓ → T↓
d. Y↓ → C↓
1. Only a
2. Only b
3. Only c
4. Only d
5. b and d
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