Search & Filtering
4.1 Which of the following best describes a difference between demand-pull inflation and cost- push inflation?
[1] Demand-pull inflation occurs when there is shortage in aggregate supply, while cost- push inflation is the upward pressure on general price level due to rising cost of production.
[2] Demand-pull inflation is triggered by increases in the cost of production, while cost- push inflation is occurring when the aggregate demand for goods and services increases while aggregate supply remains unchanged.
[3] Demand-pull inflation can be caused by increases in the cost of wages and intermediate goods, while cost-push can be caused by increased exports.
[4] There is no difference between demand-pull inflation and cost-push inflation as they are triggered by the same sources.
4.1 Which of the following statements regarding the effects of inflation is/are correct?
a) Inflation stimulates speculative practices that do not add to the country’s productive
capacity.
b) Inflation tends to benefit the government.
c) Inflation is often regarded as public enemy number one.
[1] a and b
[2] b and c
[3] a and c
[4] b
[5] All the statements are correct.
4.14 Which one of the following statements regarding the producer price index (PPI) is true?
[1] It measures the cost of living.
[2] It measures the cost of production.
[3] It has the same weights as CPI.
[4] Its growth rate is always greater than that of CPI.
4.1 Which one of the following statements best describes inflation?
[1] increase in the prices of goods and services
[2] once-off and considerable increase in the general price level
[3] a continuous and considerable increase in the price of electricity and petrol
[4] a continuous and considerable increase in the general price level of goods and services
4.1 Which of the following statements regarding the monetary and fiscal policy lags is/are correct?
a) The recognition lag is the same for monetary and fiscal policy.
b) The existence of lags makes it difficult to stabilise the economy by using monetary and/or fiscal policy.
c) The implementation lag associated with monetary policy is very long.
[1] All the statements are correct.
[2] a and c
[3] a
[4] a and b
[5] c
4.1 Stagflation is best characterised by a(n) and can be solved by .
[1] increase in output and the price level; increasing government spending
[2] increase in unemployment and the price level; increasing productivity [3] decrease in economic activities and unemployment; decreasing wages [4] declining total real production; decreasing personal income taxes
In 2020, the SARB’s monetary policy committee decided to decrease the repo rate by 1%. As a result, investment spending financed by borrowing increased which led to an increase in the aggregate spending, stimulating aggregate demand and increased price level in the economy.
4.1 The relationship described above is referred to as …
[1] the monetary transmission mechanism.
[2] the wealth effect.
[3] the exchange rate effect.
[4] the fiscal transmission mechanism.
4.1 Which one of the following chain of events best represents the monetary transmission mechanism?
[1] ∆𝑃 → ∆𝑖 → ∆𝐴 → ∆𝑌
[2] ∆𝐺 → ∆𝐴 → ∆𝑌
[3] ∆𝑖 → ∆𝐼 → ∆𝐴 → ∆𝐴𝐷 → ∆𝑌
[4] ∆𝑖 → ∆𝐼 → ∆𝐴 → ∆𝐴𝑆 → ∆𝑌
4.1 The monetary transmission mechanism can be illustrated and explained using three diagrams showing the link between .
[1] interest rate, prices and wages
[2] consumption spending, interest rate and total production
[3] interest rate, investment spending, aggregate spending and total income [4] investment spending, prices and wages, and aggregate demand
4.1 The monetary policy transmission mechanism shows the relationship between .
[1] the interest rate and spending by firms
[2] the interest rate and spending by government and households
[3] the total income and investment expenditure
[4] the price level and total production
