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2
Module 2: Measurement of Aggregate Economic Variables
1.
2.
Retained earnings
3.
4.
5.
Indirect taxes
6.
Transfer payments
2.
(a) linear.
(b) vertical.
(c) a rectangular hyperbola.
3.
4.
5.
Technological advances
2. Mismatches in supply demand for output are signaled to the firms through
(a) intended inventory changes.
(b) unintended inventory changes.
(c) None of the above.
3. The goods market clearing condition says that
(a)
(b) government budget deficit implies excess savings over investment.
(c) government budget surplus implies excess savings over investment.
4. The balanced budget multiplier in the Keynesian Cross Model is
(a) one.
(b) greater than one.
(c) .
5. The tax rate multiplier in the Keynesian Cross Model is
(a)
(b)
(c)
6. If taxes and transfer payments increase by the same amount
(a) output in the economy will not change.
(b) output will increase.
(c) output will decline.
2.
5
(a) when the economy is recovering from a recession.
(b) when the sales are unexpectedly low.
(c) when firms expect their sales to increase.
3.
4.
(a)
(b)
(c)
Investment
2.
6
(b) the prices of securities will fall.
(c) the interest rate will decline.
3.
(a)
(b)
(c)
4.
is one.
is less than one.
can be greater than one.
5.
(a)
(b)
(c)
Suppose the investment function is I = I (r, Y), Ir < 0 & Iy > 0. The IS curve will be
upward sloping.
downward sloping.
may or may not be negatively sloped.
6.
C = 200 + 0.7 Y
I = 1000 + 0.04 Y
: investment function
G = 200
: government expenditure
T = 20
: transfer payments
T = 0.2 Y
h = 0.2
l ( r ) = 600 / r
M / P = 767
: money supply
(i)
7
a
b
c
(a) 3535.
(b) 1414.
(c) 3000.
(ii)
(iii)
(iv)
(a) 10.
(b) 20.
(c) 600.
2.
3.
8
(a) when money wages become rigid.
(b) when labour market has cleared.
(c) when there is excess supply of labour.
4.
5.
Modules 9 & 10: BOP Account and Exchange Rate Systems, & IS-LM-BP Model
1.
Remittances Received = 50
Gifts Made = 10
Loans Received = 50
Grants Received = 5
(i)
(ii)
(a) 55.
(b) 45.
(c) 45.
(iii)
(iv)
2.
Devaluation of the exchange rate occurs when the exchange rate system is
(a) flexible.
(b) fixed.
(c) Devaluation and depreciation of the exchange rate mean the same thing.
3.
4.
(a) will vary directly with the sensitivity of international capital movement.
(b) will vary inversely with this sensitivity.
(c) will not depend upon international capital movement.
5.
10
6.
7.