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Which one of the following statements about the simple Keynesian (2) macroeconomic model is correct?
(1) Supply creates its own demand;
(2) Equilibrium can occur at any level of income, not only the full-
employment level;
(3) The model can be used to study inflation; (4) Wages and prices are variable.
Q.1.18 The implementation lag is ___________ for monetary policy and _____________ for fiscal policy. (2) (1) Extremely short; long; (2) Long; extremely short; (3) Long; long; (4) Long; short. Q.1.19 Creditors and debtors tend to lose during an inflationary period since: (2) (1) The nominal interest rate on their credit tends to fall; (2) The real value of their credit tends to decrease; (3) Debtors pay more in real terms; (4) The real interest rate on their credit remains constant.
Q.1.16 Japan has a comparative advantage over Germany in the production of cars if it: (2) (1) Is able to produce cars at a faster rate than Germany; (2) Produces cars at a lower opportunity cost than Germany; (3) Has the absolute advantage in car production; (4) Exports more cars than Germany. Q.1.17 Which of the following is NOT a justification for government involvement in the economy? (2) (1) To prevent excessive monopoly power by regulating monopolistic industries; (2) To ensure that common property resources are not over exploited; (3) To provide public goods as the private sector is usually not willing to provide these;
Q.1.13 An increase in the marginal propensity to consume: (2) (1) Shift the aggregate spending function (A) upwards; (2) Shifts the aggregate spending function (A) downwards; (3) Increases the slope of the aggregate spending function (A); (4) Decreases the slope of the aggregate spending function. Q.1.14 If the inflation rate is 6% and Susan receives a 6% increase in income, then, over the year, Susan’s: (2) (1) Real and nominal income both remain unchanged; (2) Real and nominal income both rise; (3) Real income rises but nominal income remains unchanged; (4) Nominal income rises but real income remains unchanged. Q.1.15 Value Added Tax (VAT) is a: (2) (1) Progressive, direct tax; (2) Progressive, indirect tax; (3) Proportional direct tax; (4) Regressive indirect tax.
Q.1.12 Which one of the following statements about the simple Keynesian macroeconomic model is correct? (2) (1) Supply creates its own demand; (2) Equilibrium can occur at any level of income, not only the full-employment level; (3) The model can be used to study inflation; (4) Wages and prices are variable.
Q.1.11 A surplus on the current account of the balance of payments indicates that: (2) (1) Financial inflows are less than financial outflows; (2) Imports are greater than exports; (3) Financial inflows are greater than financial outflows; (4) Exports are greater than imports.
1.10 When the rand depreciates against the dollar: (2) (1) The balance on the current account of the balance of payments worsens; (2) The South African Reserve Bank can influence the exchange rate by raising interest rates to attract foreign capital and thus strengthen the value of the rand; (3) The South African Reserve Bank can buy dollars to strengthen the value of the rand; (4) The South African Reserve Bank can take steps to limit the supply of dollars and in this way strengthen the value of the rand relative to the dollar.
Q.1.7 As a result of more Europeans visiting South Africa, we can expect, ceteris paribus: (2) (1) An appreciation of the rand relative to the euro; (2) A depreciation of the rand relative to the euro; (3) An appreciation of the euro relative to the rand; (4) That it will cost South Africans more to visit Europe.
1.6 GDP at ___________ prices will usually be greater than GDP at _____________ prices because of __________________. (2) (1) Constant; current; inflation; (2) Current; constant; inflation; (3) Constant; current; depreciation; (4) Current; constant; depreciation.
Q.1.4 Company tax is a: (2) (1) Progressive, direct tax; (2) Progressive, indirect tax; (3) Proportional direct tax; (4) Regressive indirect tax.
