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The monetary transmission mechanism…
- A. explains how the central bank transmits messages to the other banks.
- B. explains how banks create money.
- C. describes the ways in which changes in the monetary sector are transmitted to the rest of the economy.
- D. describes how the Monetary Policy Committee announces its decisions.
Government can increase aggregate demand by…
- A. increasing tax rates.
- B. increasing the interest rate.
- C. decreasing income taxes.
- D. decreasing government spending.
Ganesh began a mask manufacturing unit in Chennai ten years ago. He sells surgical masks to several medical institutions in South India. Though the business is doing well Ganesh started to feel that he should expand the business by attracting more customers. Ganesh has an opportunity to sell the masks to Sri Lanka and Mauritius. He has also been contacted by a party in Gurgaon for sales. Based on his production capacity Ganesh can either take up the North India market.
a. What factors are to be considered by Ganesh to decide if he wants to go for exports in Sri Lanka and Mauritius?
b. If Ganesh decides to go for Exports what procedure and documents are required?
Purchase price of equipment 400000
Cost of transport and installation of equipment 70000
Fine paid for illegal transport of equipment 10000
Using the information for Ngidi’s Clothing Manufacturers supplied in 1.1.2 above,
determine which one of the following amounts represents the total capitalised cost of
the asset, equipment. (2)
A) R400 000
B) R470 000
C) R480 000
D) R460 000
Purchase price of property 840000
Legal and transfer fees 21000
Cost of demolishing old building 30000
Proceeds from sale of old building material 9000
Architect’s and engineers’ fees 16000
Cost of construction of new building 502000
Determine which one of the following amounts represents the total capitalised cost of
the asset, property.
A) R1 400 000
B) R1 363 000
C) R1 418 000
D) R1 379 000
The long run Phillips curve shifts to the left when:
A. the aggregate demand curve shifts to the right.
B. there is a fall in inflation expectations.
C. there is a rise in inflation expectations.
D. technology and human capital increases.
Suppose the economy is initially at its long run equilibrium. If the nominal money supply increases,
which of the following is a correct statement regarding how the economy will respond in the short-
run?
A. The unemployment rate will decline below the natural rate.
B. The economy will experience cost push inflation since firms face a higher cost of borrowing.
C. The unemployment rate will rise above the natural rate and inflation will fall.
D. The natural rate of unemployment will fall and the economy will experience demand pull
inflation.
According to the short-run Phillips curve, which of the following will occur when the SARB increases
the money supply?
A. Both the unemployment rate and the inflation rate will increase.
B. Both the unemployment rate and the inflation rate will decrease.
C. The unemployment rate will decrease.
D. The inflation rate will decrease.
The trade-off between inflation and unemployment:
i. Is depicted by the long-run Phillips curve.
ii. Is consistent with the theory of money neutrality.
iii. Shows the possible effects of monetary policy in the short-run.
A. Only ii is correct.
B. Only iii is correct.
C. i and iii are correct
D. ii and iii are correct.
A Phillips curve shows that in the:
A. long run there is a trade-off between unemployment and inflation.
B. long run there is a trade-off between GDP and prices.
C. short run there is a trade-off between unemployment and inflation.
D. short run there is a trade-off between unemployment and wages.
