La Consolacion University Philippines

(formerly University of Regina Carmeli)

College of Business, Entrepreneurship & Accountancy

ECAC 3 - MACROECONOMICS
Final Examination

NAME:_ESAGA SHIRLEY L. ________________COURSE/YEAR:___BSA 3______DATE:___5/19/20______

I. MULTIPLE CHOICE. Write the letter of the best answer on the space provided. No erasures please!

C_____1. The condition of not having a job, often referred to as being "out of work", or unemployed.
A. INFLATION B. CONSUMPTION C. UNEMPLOYMENT

B.______2. A sustained increase in the price level and or a fall in the value of money
A. INVESTMENT B. INFLATION C. CONSUMPTION

B.______3. Stands for aggregate demand for goods and services by the households.
A. SAVINGS B. CONSUMPTION C. INVESTMENT

A______4. When a person loses his current job and is out looking for a new one and the time period from
shifting from one job to another.
A. FRICTIONAL UNEMPLOYMENT
B. STRUCTURAL UNEMPLOYMENT
C. SEASONAL UNEMPLOYMENT

C______5. The rate where costs rise due to economic trends of spending products and services.
A. SUPPRESSED INFLATION
B. CREEPING INFLATION
C. OPEN INFLATION

B______6. In this type of unemployment, workers do not match with their jobs or they do not have the skill
that is required in doing the work.
A. FRICTIONAL UNEMPLOYMENT
B. STRUCTURAL UNEMPLOYMENT
C. SEASONAL UNEMPLOYMENT

B._____7. This indicates how much is spent for producing goods and services to be consumed by the
households.
A. SAVINGS
B. CONSUMPTION
C. INVESTMENT

A.______8. Occurs when real wages for a job rises above the market-clearing level and because of this, many
more people apply to that job but only few vacant slots are available.
A. CLASSICAL UNEMPLOYMENT
B. CYCLICAL UNEMPLOYMENT
C. SEASONAL UNEMPLOYMENT

B______9. People generally tend to spread their consumption rationally over time.
A. MARGINAL PROPENSITY TO CONSUME
B. CONSUMPTION SMOOTHING
C. REAL INTEREST RATE

B._____10. Happens when there is an economic recession, wherein there is less demand for goods and
services.
A. CLASSICAL UNEMPLOYMENT
B. CYCLICAL UNEMPLOYMENT
C. SEASONAL UNEMPLOYMENT

A.______11. A very rapid inflation which is almost impossible to reduce.

C______12. Happens because there are some jobs that concentrate only at a certain time of the year.
A. CLASSICAL UNEMPLOYMENT
B. CYCLICAL UNEMPLOYMENT
C. SEASONAL UNEMPLOYMENT

A.______13. The decision about how much the consumption today changes depending on a change in today’s
income.
A. MARGINAL PROPENSITY TO CONSUME
B. CONSUMPTION SMOOTING
C. REAL INTEREST RATE

A_______14. Defined as those holding jobs but who want to work longer hours in their present job, those
wanting an extra job, or those who want a new job with longer working hours
A. UNDEREMPLOYMENT
B. UNEMPLOYMENT
C. BOTH A & B

B_______15. A measure of price changes in consumer goods and services from the perspective of the
purchaser.
A. PRODUCER PRICE INDEX
B. CONSUMER PRICE INDEX
C. EITHER A OR B

B______16. It happens when price levels go up because there are problems concerning supply and demand
A. COST PUSH INFLATION
B. DEMAND PULL INFLATION
C. HYPERINFLATION

A______17. It happens when the general prices of products rise, due to increase in raw materials or wages.
A. COST PUSH INFLATION
B. DEMAND PULL INFLATION
C. HYPER INFLATION

B.______18. A family of indexes that measures the average change overtime by selling prices of domestic
producers of goods and services
A. CPI
B. PPI
C. INFLATION RATE

C______19. Decisions by the government, usually relating to taxation and government spending with the goals
of price stability and economic growth.
A. MONETARY POLICY
B. FOREIGN POLICY
C. FISCAL POLICY

A______20. The regulation of money supply and interest rate by a central bank, such as the BSP (Bangko
Sentral ng Pilipinas), in order to control inflation and stabilize currency.
A. MONETARY POLICY
B. FOREIGN POLICY
C. FISCAL POLICY

C______21. An increase in the real interest rate means that savings will have higher payoff in future. Therefore,
A. NOTHING HAPPENS TO SAVING
B. DECREASES SAVINGS
C. INCREASES SAVINGS

B_______22. Increase in wealth induces current consumption and therefore,

A_______23. A situation in which a professional is employed in a low-wage, low-skilled position that does not
utilize the individual’s professional skills.
A. UNDEREMPLOYMENT
B. UNEMPLOYMENT
C. FULL EMPLOYMENT
B_______24. Described as a person who is not working or one who does not get paid, but seeks employment.
A. UNDEREMPLOYMENT
B. UNEMPLOYMENT
C. FULL EMPLOYMENT

C.______25. It is used to explain the long-run determinants of the price level and the inflation rate.
A. THE THEORY OF MONEY DEMAND
B. THE THEORY OF MONEY SUPPLY
C. THE QUANTITY THEORY OF MONEY

II. Write the letter of the correct answer on the space provided.

M______ 1. The exchange of goods and services between countries.

G______ 2. Goods or merchandise that are sold to other countries in order to earn dollars.

D______ 3. Goods or merchandise bought from other countries.

E______ 4. Occurs when a value of a nation’s export is less than the value of its imports.

I_______ 5. Occurs when a value of a nation’s export is greater than the value of its imports.

H______ 6. The integration of economies and cultures through a global network of political ideas through
communication, transportation and trade.

B______ 7. It deals with the exchange and distribution of goods and services made for local consumption.

J______ 8. A nation produces a certain product with cheaper cost and the excess production can be used to
export to other countries.

F _____ 9. Countries will benefit by concentrating on the production of those goods in which they have relative
advantage.

N_______ 10. An economic policy of controlling and restraining trade between nations through tariffs and
quotas.

A________ 11. Charges imposed on the price of imports

K________ 12. Restriction on the quantity of imports a country is allowed to have.

P________ 13. Its main objective is to increase world income and standard of living through the expansion of
international trade

L_______ 14. A forum for governments to negotiate trade agreements and to settle disputes.

C________ 15. The review and restructuring of the Philippine tariff system by the government.

A. Tariffs I. Trade Surplus

B. Domestic Trade J. Principles of Absolute Advantage

C. TRF K. Quotas

D. Import L. WTO

E. Trade Deficit M. International Trade

F. Principle Of Comparative Advantage N. Protectionism

G. Export O. Specialization

H. Globalization P. GATT
 III. ENUMERATIONS

1. Problems that may be encountered in international trade.

1. DISTANCE

2. LANGUAGE BARRIER

3. RISK IN TRANSIT

4. EXPORT AND IMPORT RESTRICTION

5. DOCUMENTATION

2. Why is international trade important?

1. COMPARATIVE ADVANTAGE

2. MAKE USE OF OTHER COUNTRY’S ABUNDANT RAW MATERIAL

3. GREATER CHOICE FOR CONSUMERS

4. GLOBAL GROWTH AND DEVELOPMENT

5. SERVICE SECTOR TRADE

IV. DISCUSSION:

1. How can fiscal policy be used as an intervention of the government to stabilize the economy?

Fiscal policy has a stabilizing effect on an economy if the budget balance—the difference between expenditure
and revenue—increases when output rises and decreases when it falls. For instance, if output suddenly
contracts, policymakers can let tax revenues fall along with income (or even deliberately cut tax rates) and let
unemployment benefits increase with the number of unemployed. This maintains income and purchasing power
for individuals, and supports demand. Policymakers can also raise demand directly by deliberately spending
more. Either way, higher deficit (or a lower surplus) effectively cushions the blow on output.

2. Which do you think should be the first priority of the government to solve unemployment or to solve
inflation?

The solution for unemployment is, of course, to create new jobs.Also,cutting taxes works like
lowering interest rates. Both give businesses and consumers more money to spend. That
increases demand. It gives businesses more cash to invest and hire more workers.

Government spending can take the form of jobs programs. The government hires employees
directly. It also contracts with companies to build things and provide services. It provides
consumers with the cash they need to buy more products.
 3. What will you do if you have won millions of pesos in Lotto? Will you save it or invest it?

I will work closely with a financial planner to come up with investment strategies that will grow
my money over time. I would buy several rental properties, and lease them out so that I too
can be a bit of a haciendera. One thing nice about passive income is you sit there and it
comes in and every year there’s an escalation clause for your rent—there’s always a 5-10
percent—and so I’ll keep up with inflation and I don’t have to do very much.
The rest I'd take to build and run another consumer/tech business that hopefully turns into a
unicorn because the world needs more kickass Asian women running highly successful
companies.

4. What are the possible causes and solutions to unemployment in the Philippines?

Unemployment in the Philippines is attributed to reasons including overpopulation, oversupply

Employment subsidies can be provided by the government for firms who hire workers that are
unemployed. With a subsidy, costs of production for firms go down since the price of each unit
of labour resource decreases. Hence, employers will be more willing and able to hire more
workers and increase the number of workers that they are willing to hire. This increases the
size of the workforce and the number of job vacancies, hence helping to reduce
unemployment. However, it is difficult for governments to determine how much subsidy to
provide and it is difficult to ensure that firms are willing to retain the increased size of their
workforce when there are changes in the economy (eg. Recession)
Prepared by: Approved By:

MS. EVANGELINE P. DAYAO, MBA DR. MARIA CORAZON D. SEGISMUNDO, CPA