Macroeconomics Answers

1. For the following statements, state Agree or Disagree. And provide brief explanations.

a) More than half of the money issues by the government is actually held by people in foreign countries. Australia is hence less than half as wealthy as government statistics indicate’. (1.5 marks)

b) Assets are things of value people own. Liabilities are debts. Hence, a bank will always consider a deposit in the account as an asset and a car loan as liability. (1.5 marks)

c) In 2010 hundreds of thousands of jobs were eliminated from the Australian economy. This means that unemployment rate must have risen. (1.5 marks)

Why monetary and fiscal policy are known as automatic stabilization measures in an economy

Analysis the behaviour of the market for goods and money at the intersection of IS-LM function

When choosing shares and investing on the JSE you are making use of which function/s of money?

Calculate the money multiplier from the following information:
Currency drain ratio: 20% Reserve ratio: 10% Deposit: R60 000

If ___ increases, both the interest rate and the quantity increase/s. When ___ increases, the interest rate drops and the quantity increases.

How can the South African Reserve Bank can increase the quantity of money available

9. To be considered part of M3, deposits need to be held:
a) longer than 5 years.
b) longer than 6 months.
c) longer than 30 days.
d) All of the above.

which one is correct?

7. Financial markets are not bound by borders and mobility of capital creates a single real interest rate. Why do interest rates then differ between countries?

6. The crowding out effect refers to how a government budget deficit ___ the demand for loanable funds. This leads to ___ real interest rates that ___ investment.