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(REVISION 1) FPEC1064 MACROECONOMICS – TOPICS 1, 2, 3 (MCQ)

Question 1: Multiple Choice Questions (30 Marks)

Q1(a). Which of the following will increase the national income level in the economy?

A Imports
B Government purchases
C Income tax
D Saving

Q1(b). Which of the following is not an example of transfer payment?

A Overtime payment to labour

B Disability pensions paid from the social insurance system
C Unemployment insurance benefits
D Government student allowances

Q1(c). The table identifies the functions of money and the principal benefit that each function produces.
Which function of money is correctly matched with its principal benefit?

Function
A medium of exchange
B standard of deferred payment
C store of wealth
D unit of account
Benefit
permits a system of credit to operate
encourages the accumulation of funds for future use
overcomes the drawbacks of the barter system
allows the relative value of goods to be compared

Q1(d). Which of the following is categorized as a transfer payment?

A Bonus of bank employees

B Salaries of employees
C Meal allowance paid to pilots
D Pension paid to retirees

This question paper consists of 1 question on 4 printed pages.

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Q1(e). The table below shows the value of output for some parts on an economy in Country X.

Item Value of output (RM Billion)

Fishing 25.0
Manufacturing 130.5
Mining 23.0
Financial services 100.3
Other services 170.0

Based on the table above, what conclusion may be drawn from these statistics?

A The value of the primary sector was RM25.0 billion

B The tertiary sector was the most valuable

C The value of the secondary sector was RM153.5 billion
D The value of the secondary sector is less than the value of the primary sector

Q1(f). Which change would best indicate that a country has experienced economic growth?

A An increase in taxation
B An increase in government spending
C An appreciation in the country’s currency
D An increase in the country’s GDP

Q1(g). Aggregate expenditure in an open economy is the sum of _______________________________ .

A C + I + G + (X - M)
B C+I+G
C C + I – G – (X - M)
D C + I + G + (X + M)

Q1(h). Which of the following are components of aggregate expenditures in a closed economy?

A Household consumption, business investment, government spending and net export

B Household consumption, business profits, government transfer payments and net export
C Household consumption, business profits, government spending and imports
D Household consumption, business investment and government spending

This question paper consists of 1 question on 4 printed pages.

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Q1(i). Which of the following will cause the aggregate supply curve to shift right?

A Bad weather
B Subsidies
C Taxation
D Low capital

Q1(j). Which of the following is used as a measure of standard of living?

A Output per employed person

B Per capita income
C Investment level per year
D Average expenditure per person

Q1(k). The table below shows the national income accounting data for a country in the year 2015.

Item RM billion

Indirect business taxes 500

Subsidies 2500
Government expenditure 1800
Exports 3500
Investment 2500
Consumption 3000
Imports 1200

Calculate the value of GDP at market price.

A RM2300 billion
B RM7300 billion
C RM9600 billion
D RM10000 billion

This question paper consists of 1 question on 4 printed pages.

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Q1(l). The diagram below shows the aggregate demand and aggregate supply curves.

Price Level

AS2
ASo
B AS1
A C
D

AD1
AD2 ADo

0 Real Output

What would be the new equilibrium point if the government implements taxes on goods?

A Point A
B Point B
C Point C
D Point D

Q1(m). What is value added?

A The added level of profits

B The added value created when intermediate goods are processed into final goods
C The value of final goods in market prices
D The value of production calculated based on cost price

Firm Product Purchasing price Selling price (RM) Value added (RM)
(RM)
I Wheat - 500
II Flour 500 800
III Bread 800 1500
IV Retailers 1500 2500
Total added
value

This question paper consists of 1 question on 4 printed pages.

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Q1(n). What is the difference between Gross Domestic Product (GDP) and Gross National Product (GNP)?

A Direct taxes
B Government subsidies
C Net income from abroad
D Net exports

Q1(o). The table below shows the national income components for Country X.

Item RM million
Imports 1500
Factor income received from abroad 2000
Subsidies 1000
Consumption 9000
Indirect business taxes 800
Factor income paid to abroad 1800
Government purchases 6500
Investment 4000
Exports 2000

Based on the table above, determine the value of net exports and GNP at market price.

Net exports (RM million) GNP at market price (RM million)

A 500 20200
B 500 23500
C 1000 30000
D 2000 31250

This question paper consists of 1 question on 4 printed pages.