Macroeconomics Answers

True or False Questions

Question 9

If CF = CF₀+0.25(i_d, i_f), was can say that CF₀ is the value of foreign investment.

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True

False

Question 10

In small Pacific Island economies (like Kiribati), monetary policy works best.

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True

False

Question 11

Tourism was the largest foreign exchange earner for Fiji in 2020.

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True

False

Question 12

Fiji government’s debt remains manageable in 2021.

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True

False

Question 13

In the Keynesian world, an expansionary fiscal policy would always crowd-out private investment, if monetary policy not accommodative.

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True

False

Question 14

In a liquidity trap situation, monetary policy is totally ineffective.

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True

False

Question 15

When LM = 0.5Y-50i (where Y = 5000, i= 5%), the real money supply should be 2250.

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True

False

Question 16

The AD curve is a locus of points of simultaneous equilibria of goods and money markets.

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True

False

True or False Questions

Question 1

The key deterrent of wage flexibility are the frictions in the labour market.

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True

False

Question 2

In the Cramer’s rule, the determinant of A matrix is never used.

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True

False

Question 3

Normally, it is possible to generate long-run economic growth with investment policy.

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True

False

Question 4

At best, the total factor productivity can be estimated, but is unobserved in data.

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True

False

Question 5

In fixed exchange rate system, inflation is controlled through exchange rate policy.

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True

False

Question 6

The direct effect of COVID19 on any economy would be reduced capital productivity.

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True

False

Question 7

Inflation expectations guide the stance of monetary policy in the short run.

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True

False

Question 8

The short run aggregate supply can be understood using Phillips curve.

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True

False

How can oligopoly cause market failure

If the marginal income is $5,000 and the marginal propensity to save is 0.30, savings is:

A. $90

B. $1,590

C. $3,500

D. $1,500

E. None of the above

If the level of government spending were to decrease by 100 units in the IS – LM schedule

 model, how would this affect the position of the IS schedule? In which direction would the

 schedule shift, and by how many units?

What are the endogenous and exogenous variables?

Is collusion possible in the Aerospace and Defence manufacturing industry in South Africa?

Explain how each of the following developments would affect the supply of money, the demand

for money, and the interest rate. Illustrate your answers with diagrams.

Consider a hypothesis economy described by the following equation

C=100

I=1200

X-1110

M=200+0.25Y

T=250+0.3Y

Required

1.Compute the equilibrium level of the national income

2.The level of consumption income after tax and net exports that corresponds to the equilibrium level

national income

Explain how the interest rate works in the classical system to stabilize aggregate demand in the face of autonomous changes in components of aggregate demand such as investment or government spending