Infrastructure University FINAL EXAMINATION SEPTEMBER/OCTOBER SEMESTER 2017 MACROECONOMICS (ECON 1301D) (TIME : 2 HOURS) MATRIC NO. IC. / PASSPORT NO. : LECTURER : MOHD AZHAR HAMZAH 1 Tis eons cons of rad apsncing is pase ‘Answer ALL questions inthe QUESTION PAPER. CONFIDENTIAL Page | of 10INSTRUCTIONS: ‘uM: 2 HOURS SECTION A (4S MARKS) ‘There are THIRTY (30) questions in this section, Answer ALL Questions in the ‘Question Paper. 1. A government with a can pay up its debs or eam interest on fund. ‘A. Surplus budget B. Deficit budget C. Surplus trade D. Deficit trade 2. The major portion ofthe revenue for government is from. ‘A. consumptions Btaxes C. investments De exports 3. Tax that is paid by the person on whom it is levied and eannot be passed on another person known as. ‘A. antonomous tx B. indies tax direst tax D inverse tax 4, Fiscal policy involve ‘A he use of interest rates oTnflacnce the level of GDP. BB. the use of ax and spending policies by the goverment. CC. decreasing the role ofthe Federal Reserve in the every life of the economy. D. the use of tax and money policies by goverament to influence the level of interest tes, 5. Which ofthe following bodies are responsible forthe conduct of monetary policy? ‘A. The Central Bank 1B, Commercial Banks C the Prime Minster D. the President ECONTSOIDS@pUOCROIT Page 20f 106, The automatic stabilization would automatically aggregate expenditure during ‘. increase B. decrease Call ofthe shove 1D. none af the above 1 The increase in discount rates is ool in and usually curs during inflation ‘A. coniractonary fisal policy BB. conactionary monetary policy C expansionary fiscal policy D. expansionary monetary policy 8.A wave-te fluctuation in aggregate economic activity particularly with regard to national ‘income, employment and ouput known as “A.recession B. peek C. growth D. business cycle 9, The minimum point during the end of recession known as "A. trough B. recovery peek D. recestion 10, Te labor force is the sum ofthe ‘A working-age population and the number af unemployed people. Bnumber of employed people and the working-age population. CC. number of employed people and the number af unemployed people. _. total population and the number of unemployed people 11 Because of bank merger, Ms. Davis lost her postion as Vie President and had to seek ‘work with other banks, Ms, Davis as the sills necessary fo find a new job, thus abe ie best considered as: “A fictonally unemployed B, cyclically unemployed. structurally unemployed ‘D naturally unemployed ECONTSOIDISpOOGROT are ot.12 In Country A, the population was 265.5 milion and the working age population was 200.6 million. There were 133.9 million people inthe labor Force and 126.7 f them were ‘employed. The unemployment ate equaled ‘A. 72 percent, B54 percent 3.6 percent D. 35 percent 13, An increase in the price level is defined as “A. a recession, Ba gowth boom, inflation. Dan expansion. 14, Demand pul inflation results from continsally increasing the quantity of money, which eas oa cosiaully fs deweasing longi agree sappy B increasing ogreat uppy decreasing aggregate demand, D-inreasingageregate demand 15. Ina cost-push inflaton, "Ac inoreases in AD lea to nereane in SAS, B, decreases in AD lead to increases in SAS. C.incteaes in S45 lead to decreases in AD. 1D decreases in S4S lead to increases in AD. 16.To prevent cost-pus inflation ‘A there must not bean excess demand Tor money. B: interest rates must nts, (C there must not be an increase in government purchases. . the Fed must not let the quantity of money rise persistently 17. The funetions of money are ‘A. modium of exchange abd the abiliy to bay apods and services. medium of exchange, unit of account, and means of payment pricing, contracts, and means of payment. , medium of exchange, unit of account, and store of value. ECONTSUIDIS@pIOROTT apo18. A $25,000 price tag ona new ca isan example of money a: ‘A. medium of exchange, Ba unit of account, Ca store of value D. time deposi. 19, Money consists of ‘A. currency only BB, deposits at banks onl. Coins oaly DD. cureney and deposits at banks 20, The demand for money curve ‘is horizontal. Bhs a positive slope, C.is vertical 1D. asa negative slope. 21. The demand for money curve isthe relationship baween and. other ‘things remaining the same. ‘A. the quantity of eal money demande; the quantity of real money supplied B,the quantity of money demanded; the real interest rate the money demande; the money suppl D. the quantity of real money demanded the interest rate 22. When the quantity of money demanded is greater than the quantity of money supplied, people ‘bonds and the interest rate A sll is B sel falls bay, rises D. by, falls 23, Suppose that the interest rate is grater than the equlibeum interest rae, Which ofthe following occurs? 1. There isan excess quantity of money. 1. The quantity of money automatically increases. ihe interes ae falls A Tonly BlandI tana Di Wand mt ‘ECONTSOID =p $$24, The curency used to buy imported goods i ‘A. special drawing righ 1B the buyer's home curency the cuency of third country. _ the sellers home cumency. 25. The exchange rate i the ‘A opportunity cos of parsuinga nation's comparative advantage. B. price of one country’s curency expressed in terms of another county's currency. CC. ratio between imports and export. D. interest rate thai charged om risk-free inteational capital low. 26, Ifthe dolla’ value changes from 120 yen per dollar to 110 yen per dollar, the dollar has: ‘A. depreciated B. appreciated. C. demanded. D_ devalued 27, Goods and services that we buy fom people in ater countries ae alld our ‘A balance of payments B. exports, import. D. terms of trade, 28, The United States has a comparative advantage in producing airplanes if ‘A. ican produce them at lower opportunity cos, B.itean produce them ata lower dalla cost. Cit ean produce a larger quantity, D.ithas a larger quantity of skilled workers. 29. Consider « market that is intially in equilibrium with quanity demanded equal 10 ‘quantity supplied a a price of RM20. If the world price ofthe good is RMIO and the country opens upto international wade then inthis markst we would expost ‘A. imports wil neeas, price will fal, and quantity supplied wil fall B. exports wil inereae, price will be unchanged, and quantity supplied wil inerease CC. imports wil increase, price will deerease and the supply curve will shift to the et . quantity demanded will decrease, quanity supplied will decease, and price will decrease ECONTSOIDS@pUOCROIT Page 6 of 1030, Tvs and import quotas both result in ‘A lower levels of domestic production BB. the domestic government gaining revenue, lower levels of import, D. higher levels of domestic consumption. ‘Answers for Multiple Choice Questions: ‘nner ECONTSOIDS=pvOGDOIT Page 7 of 10SECTION. (6S MARKS) ‘There are FIVE (6) questions in this section. Answer ALL questions in the Question Paper. ‘Question 1 (15 marks) ‘The table below shows the amount of tax paid in three countries; A, B and C, Fill in the ‘blanks with original tax rate, new tx ate and typeof tax structure Countey | Original | Original | Original | New | New] New x] Type of wx Ineame | taxpaid | taxrate | income | tax structure Tevel| (Smarks | “evel | paid (marks each) each) ach, A 100 | so 000 | soo B 0 | 72 s000 | 480 © 130 | 130 10000 | 500 ‘Question 2(15 marks @ 1.5 marks each Fill nthe blank spaces inthe table below. Suppose... Does the price levelvise, — | Does real GDP rit, fall fallor remain constant | | or remain constant “AD rises "AD sises by more than SRAS falls ‘SRAS alls al 'SRAS files By the sme amount as AD rises RAS rises ECONTSOIDS@pUOS2OIT Page 8 of 10‘Question 3 (10 marks) 2) Fill inthe banks (marks) Bank [New deposit ‘Required reserve [New loans A 500 1400 B 1000 se +) Calutate the required reserve ratio for Bank A and Bank B? (marks) Question 4 (5 marks) Explain with diagram the effect ofan increase inthe supply of money on te intrest rate, ‘BCONTSOIDS@p0eOT Page 9 of 10‘Question § (10 marks Diagrammatcally represent the following 8) Demand-pll inflaton. (maria) 1) Cost push inflation. (Smarts) “++ END OF QUESTIONS *** ECONTSOIDS—pCOGROTT Page 10 oF 10