Macroeconomics Answers

Which of the following statements describes the effect of the South African Reserve Bank selling government bonds?

1. The money supply decreases and the interest rate increases.
2. The money supply increases and the interest rate decreases.
3. There is a decrease in equilibrium output in response to the increase in the interest rate.
4. There is an increase in equilibrium output in response to the decrease in the interest rate.

II) only.

(I) and (III) only.

(II) and (IV) only.

(II) and (III) only.

Are there limits to how much public debt a country, such as South Africa, could have? Use intellectual standards in your argument.

1.Which of the following statements about users of accounting information is incorrect?

a.

Regulatory authorities are internal users.

b.

Management is an internal user.

c.

Taxing authorities are external users.

d.

Present creditors are external users.

If the production possibility frontier has a constant slope, the production possibility frontier is:

bowed out from the origin.

circular.

a straight line.

bowed in toward the origin.

Which of the following statements describes the effect of the South African Reserve Bank selling 

government bonds? 

(i) The money supply decreases and the interest rate increases. 

(ii) The money supply increases and the interest rate decreases.

(iii) There is a decrease in equilibrium output in response to increase in interest rate. 

(iv) There is an increase in equilibrium output in response to decrease in interest rate.

A. (i) and (iii) only.

B. (ii) only.

C. (ii) and (iv) only.

D. (ii) and (iii) only.

Which of the following will lower inflationary expectations?

A. The government's announcement that it will increase spending on infrastructure.

B. The SARB announcement that it will steadily raise the repo rate.

C. An increase in consumer and business optimism.

D. An increase in the money supply

To counteract a recession, the SARB could:

A. Buy government securities on the open market and raise the required reserve ratio.

B. Buy government securities on the open market and lower the required reserve ratio.

C. Sell government securities on the open market and raise the repo rate.

D. Raise the required reserve ratio and lower the repo rate.

Suppose that the economy is operating at full employment. If the government wants to discourage 

consumption spending and stimulate investment spending, which of the following combinations of 

monetary and fiscal policy would most likely achieve these goals, assuming that consumption does 

not depend on the interest rate?

A. Monetary Policy- Increase money supply and Fiscal Policy- decrease personal income taxes

B. Monetary Policy- Increase money supply and Fiscal Policy- Increase personal income taxes

C. Monetary Policy- decrease money supply and Fiscal Policy-Increase government spending

D. Monetary Policy- decrease money supply and Fiscal Policy- Increase personal income taxes

Which of the following would result in the largest increase in aggregate demand?

A. A R30 billion increase in military expenditure and a R30 billion open market purchase of 

government securities.

B. A R30 billion increase in military expenditure and a R30 billion open market sale of government 

securities.

C. A R30 billion tax decrease and a R30 billion open market sale of government securities.

D. A R30 billion tax increase and a R30 billion open market purchase of government securities.