Macroeconomics Answers

What happens to the balance of payments of south Africa when exports exceed imports?

1. Inflow of foreign exchange
2. Outflow of foreign exchange
3. Balance of payment will be in equilibrium
4. Investment will decrease

Choose the correct answer
Demand-pull inflation may be caused by_________, while cost-push inflation may be caused by_________.
1. an increase in aggregate expenditure; an increase in prices of imported capital and intermediate goods.
2. an increase in aggregate production; a decrease in the prices of imported capital and intermediate goods.
3. an increase in total production; an increase in aggregate demand.
4. a decrease in consumption spending; a decrease in the production cost.

Which economic indicators do you think are most influenced when the inflow of remittances increases in Bangladesh in 2020?

39. Suppose the economy of South Africa is experiencing rapid increase of price level. The
economy is at equilibrium at an income level of R950 billion, which is above the full-employment
level of income (Yf) of R900 billion. The marginal propensity to consume is 0,75. If the
government wishes to close the income gap and slow down the increase in the price level, it
should…
[1] cut its spending by R50 billion.
[2] cut its spending by R200 billion.
[3] raise its spending by R50 billion.
[4] cut its spending by R12,5 billion.
40. Fiscal policy includes…
a) policy on government spending on official travel allowances of politicians.
b) policy on consumption taxes such as those on cigarettes.
c) policy on salaries paid to government employees and politicians.
[1] a and b
[2] b and c
[3] b
[4] a, b and c

34. Suppose autonomous imports exceeds exports. In the Keynesian model, when we add the
negative net exports to C + I + G …
[1] the A curve shifts upwards
[2] the A curve shifts downwards
[3] the A curve does not shift
[4] the multiplier increases
35. Nthabiseng’s monthly disposable income increases from R3 000 to R3 400. As a result, her
monthly savings increase from R400 to R560. This implies that her marginal propensity to
consume is …
[1] 0,40.
[2] 0,20.
[3] 0,60.
[4] 0,80.

26. The consumption function is based on the premise that as income increases, consumption
expenditure…
[1] increases by a smaller amount than income.
[2] increases by a larger amount than income.
[3] increases by the same amount as income.
[4] remains constant unless saving also changes.
27 The equation C = 75 + 0,7Y, where C is consumption and Y is disposable income, tells us that…
[1] households will consume R75 if their disposable income is zero and will consume 0,7 of any
increase in disposable income they receive.
[2] households earn R75 and spend three quarters of their income.
[3] households will save R75 if their disposable income is zero and will consume 0,7 of any
increase in disposable income they receive.
[4] households will consume 0,30 of whatever level of disposable income they receive.

24. If output remains the same, a change in nominal GDP from 2018 to 2019 represents…
[1] economic growth.
[2] an increase in unemployment.
[3] an increase in production.
[4] an increase in the price level.
25. Which one of the following statements is correct regarding consumption and saving in the
Keynesian model?
[1] If total consumption exceeds total income, this is an indication of dissaving.
[2] If the initial income is zero, then total consumption will be equal to total saving.
[3] Given that income does not decrease, a decrease in consumer spending will result in a
proportional decrease in saving.
[4] If autonomous consumption increases, consumer spending will remain the same, ceteris
paribus.

21. Which of the following items would NOT be included in the calculation of GDP?
[1] purchase of electricity by a household for home use
[2] merchandise exports by local firms
[3] purchase of a used car by Thomas for personal use
[4] purchase of new bicycles by a bicycle rental firm
22. Which one of the following is an example of an intermediate good?
[1] shoes worn by the manager of a shoe store
[2] a loaf of bread that is served to hotel guests
[3] a lawnmower used by Thomas to mow his family’s lawn
[4] apples used for cooking and to make juice for hotel guests

Which of the following is correct regarding the Balance of Payments (BOP)?
[1] A capital inflow from Zimbabwe to South Africa is recorded in the current account.
[2] A computer software import from China to Namibia, represents a negative item on the BOP
of China.
[3] An investment by a Chinese firm in the steelwork industry in South Africa is recorded as an
inflow of funds in the financial account on the BOP of South Africa.
[4] The BOP records all economic activities that take place within the borders of South Africa.

An appreciation of the South African Rand against the US Dollar will lead to a(n)…
[1] decrease in South Africa's exports to the United States and worsen the South African current
account balance.
[2] decrease in South Africa's imports from the United States and improves the South African
current account balance.
[3] increase in South Africa's exports to the United States and Improve the South African current
account balance.
[4] increase in United States’s imports from South Africa and worsens the South African
financial account.