CONFIDENTIAL BM/JUN 2014/EC0211/164/210/219 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE : MACROECONOMICS COURSE CODE : ECO211/164/210/219 EXAMINATION : JUNE 2014 3 HOURS INSTRI 1 This question paper consists of three (3) parts : PART A (20 Questions) PART B (4 Questions) PART C (4 Questions) 2 ‘Answer ALL questions from PART A and PART B. Answer any two (2) questions from PART C. i) Answer PART A in the Objective Answer Sheet. ‘Answer PART B in the Answer Booklet iil) Answer PART C in the Answer Booklet. Start each answer on a new page. 3 Do not bring any material into the examination room unless permission is given by the invigitator. 4 Please check to make sure that this examination pack consists of : i) the Question Paper ii) an Answer Booklet - provided by the faculty iii) an Objective Answer Sheet - provided by the faculty DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO This examination paper consists of 11 printed pages (© Hak Cipta Universiti Teknolog! MARA CONFIDENTIALCONFIDENTIAL 2 BMIJUN 2014/EC0211/164/210/219 PART A 1 Macroeconomics deals with ‘A. _ behavior of the firms. B. the activities of individual units. C. the behavior of the automobiles industry. D. economic aggregates. 2 Objectives of macroeconomics include all of the following except A. maximize employment gener B. achieve full employment. C. achieve economic justice and freedom. D. universal education. 3. Suppose that a Japanese automaker produces trucks in the United States using all Japanese components and labor. The trucks produced are included in A. United States GNP but not United States GDP. B. neither United States GNP nor United States GDP. C. _ both United States GNP and United States GDP. D. United States GDP but not United States GNP. 4, Alll of the following factors for income except A. rent. B. indirect taxes. C. wages and salaries. D. corporate profits. 5. __ Inan opened economy, leakage consists of ‘A. investment and savings. B. savings only C. savings and taxes D. _ savings, taxes and imports (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 3 BM/JUN 2014/ECO211/164/210/219 10. A decrease in the wealth causes an upward shift in the consumption function. causes a downward shift in the consumption function. only affects savings not consumption causes no change in consumption. gom> Which of the following policies be used to close an inflationary gap? ‘A. An increase in government spending and increase in transfer payment. B. Anincrease in tax C. Anincrease in government spending D. An increase in transfer payment. ‘Aggregate supply is the total amount of goods and services produces in an economy. of products produced by a given industry. a labor supplied by all households. produced by government. pom> At an income of RM10,000, Sheri will spend RM9,000 on consumer goods. When her income rise to RM20,000, she will spend RM16,000 on consumer goods. Sheri marginal propensity to consume is A 09 B 08 c 07 D 06 If the MPC = 0.8 and investment increases by 20 million, determine the change in ‘equilibrium income ‘A. Income equilibrium increases by 100 million B. Income equilibrium decreases by 100 million C. Income equilibrium remain unchanged D. Income equilibrium increases by 25 million (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 4 BMIJUN 2014/EC0211/164/210/219 1" 12. 13. 14. 15. Calculate the government spending multiplier if the value of marginal propensity to save is 0.25 33 com> heos ‘The barter system's problem of necessity for dual coincidence of wants can be ‘overcome by the function of money as a A. medium of exchange B. measure of value C._ store of value D. method of deferred payment Money that can be directly use for transactions is A. near money. B. broad money cM D. M2 With a regressive tax, as income Increases, the tax rate remains the same. Decreases, the tax rate decreases. Increases, the tax rate increases. Increases, the tax rate decreases. Som> ‘Sonia makes RM30,000 per year and pays RM6,000 in income taxes. Raj makes RM40,000 and pays RM10,000 in income taxes. This is an example of a progressive tax. a regressive tax. a proportional tax. the benefits-received principle. gom> (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, 5 BM/JUN 2014/EC0211/164/210/219 16. 17. 18. 19. 20. Which of the following is not an example of indirect taxes ‘A. import duties. B. excise taxes. C. individual income tax. D. sales tax. ‘Suppose the population is 175 million people, the number of people unemployed is 20 million and the number of people employed is 130 million. Calculate the labor force participation rate? A. 85.7 percent. B. 15.4 percent C. 11.4 percent. D. 74.3 percent. Which of the following is regarded as being in the labor force People aged 60 who do have retired early. Full-time student who do not have paid employment. People who have chosen to care for their families of homes rather than seek paid employment. People who have lost their jobs because of the recession and cannot at present to find the jobs. 9 9@> The difference between a country’s merchandise exports and its merchandise imports is the: balance of trade. balance of payment. capital account. current account. pop In international trade, tariff refers to ‘A. atax on imports B. A limit on the quantity of goods that can be imported into a country. C. Agovernment payment to encourage exports. D. The price of goods when they leave the producing country. (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 6 BMJUN 2014/EC0211/164/210/219 PART B QUESTION 1 Below are some data regarding national income for country XYZ. [Output of Sector Million (RM) Agriculture 520 [Manufacturing 450 [Construction 230 Mining and gas 95 ‘Wholesale and retail 105 Banking and insurance 200 Electricity and water 140 Other services 60. Tax on consumption 110 | Factor payment to abroad 70 Factor payment from abroad 85 Capital consumption 50. “Transfer payment 15 Employee Provident Fund 45 Personal income tax 150 Calculate: a) Gross Domestic Product at market price. b) Gross Domestic Product at factor cost. ©) Gross National Product at market price, 4) National Income ) Disposable Income. (© Hak Cipta Universiti Teknologi MARA (3 marks) (2 marks) (1: mark) (1 mark) (3 marks) CONFIDENTIAL,CONFIDENTIAL 7 BM/JUN 2014/EC0211/164/210/219, QUESTION 2 Given below is data of an economy. a) b) 3) °) Consumption (C) = 150 +0.8Yd Investment (1) = 100 Government expenditure (G) = 200 Tax (T) 100 Export (X) 450 Import (M) 200 (all values are in RM million) Calculate the marginal propensity to save. (1 mark) Derive the savings function from the consumption function. (1 mark) Calculate the level of national income equilibrium by using Aggregate demand ~ Aggregate supply approach. (3 marks) If the full-employment level of income for the above economy is RM 450 million, is there an inflationary or deflationary gap? Sketch the diagram to show the situation. (3 marks) Calculate the change in government expenditure that is required to bring the economy to the full employment level of income. (2 marks) (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 8 QUESTION 3 The table below shows the money supply for country Z in 2012 BMIJUN 2014/EC0211/164/210/219 items Smilfion | Coins 20000 Paper money 71000 Negotiable certificates 23000 Fixed and saving deposits in commercial banks ‘80000 Fixed and saving deposits in other financial institutions 56000 Current deposits in commercial banks 40000 (Central Bank certificates 55000 Calculate a) Mt (2 marks) b) M2 (2 marks) ° M3 (2 marks) d) Narrow Quasi Money (2 marks) e) Broad near money (2 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 8 BM/JUN 2014/ECO211/164/210/219 QUESTION 4 The following figures summary of a country's balance of payments for a given year. items RM Million Export 280,248 import 237,524 Freight and insurance [-9,725 Net transfer -3,173 Error and omissions 24,613 Official long term capital 7,643 Corporate investment 12,240 Net private capital 31,798 (Other tranportation 1,987 Travel 5,276 Investment income =16,135 ‘Government transactions “84 [Other services -805 Based on the given information, calculate: a) Trade Balance (1 mark) b) Service Account Balance (2 marks) ) Balance On Current Account (3 marks) d) Capital Account Balance (2 marks) e) Overall Balance (2 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 10 BM/JUN 2014/EC0211/164/210/219 PART C QUESTION 1 a) __ Discuss four (4) macroeconomics objectives from Islamic perspectives. (10 marks) b) Describe any four (4) uses of national income accounting. (10 marks) QUESTION 2 a) i) __ Describe three (3) factors which can influence the consumption expenditure in conventional economics. (6 marks) ii) Investment in Islamic perspective must be based on certain elements. Identify and explain two (2) of them. (4 marks) b) Describe any four (4) tools of monetary policy. (10 marks) QUESTION 3 a) Discuss four (4) types of unemployment in Malaysia. (10 marks) b) Describe three (3) types of government budget. (6 marks) ©) Explain two (2) sources of government revenue in Muslim country (4 marks) (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL " BM/JUN 2014/ECO211/164/2101219 QUESTION 4 a) __ Discuss four (4) measures to solve the problems of deficit in the balance of payment. (10 marks) b) i) __ Using an appropriate diagram, discuss the concept of cost-push inflation. (6 marks) ii) Describe how fiscal policy can help to overcome the problem above. (4 marks) END OF QUESTION PAPER © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL