NNAMDI AZIKIWE UNIVERSITY TYPE A

Department of Economics
Faculty of Social Sciences

2nd Semester Examination Department:

Redg no: Name

Course Code: ECO 213 Course Tittle: Macroeconomics 11 Time: 1: 10 minutes

Instruction: Answer all by ticking the correct option. Each question is allocated 1 mark

1. A timeless economy is ----------- economy

(a) dynamic (b) stock(c) static (d) comparative
2. one of the components of aggregate demand earned abroad is (a) exchange rate (b) export (c) import (d) interest
3. Net export is subtracted when using expenditure approach in national income accounting when (a) imports ˃
exports (b) export ˃ import (c) import = export (d) import not recorded
4. Keynes is against thrift paradox because it put the economy ---------- (a) in full employment (b) in more
depression (c) in more inflation (d) in more boom
5. A stock variable includes the following except; (a) wealth (b) money (c) income (d) gold
6. MV = PT is an equation of the quantity theory of money as propounded by -------------- (a) Thomas Pierre (b) Ibni
Khaldum (c) Irvin Fisher (d) Thomas Malthus
7. The national circular flow of income is an economic model formulated by the ----------- school (a) classical (b)
Keynesian (c) neoclassical (d) Cambridge
8. The quantity of an economic variable relating to a point of time is referred to as (a) flow (b) static (c) dynamic (d)
stock
9. The G in the aggregate demand covers items that include ----------- (a) taxes (b) transfer (c) gift (d) schools
10. Investment in an economy means ------------- (a) more savings (b) increased stock (c) few labour (d) existing
capital
11. 1/1-b in national income determination is called ----------- in income determination. (a) Multiplier (b) MPC (c)
MPS (d) MPI
12. Given 1/1-b if b = 0.6, calculate the MPC. (a) 2.5 (b) 0.4 (c) 4.0 (d) 0.6
13. Given Personal Income before tax = N10,000, Consumption = N3200 and Savings = N5400, tax paid equals
---------- (a) N3,300 (b) N1,400 (c) N2,500 (d) N,800
14. Which of the following is true about a country with trade deficit? (a) net exports are negative (b) net capital out
flow must be positive (c) net exports are positive (d) export exceed import
15. One of the following does not determine investment ----------- (a) interest rate (b) exchange rate (c) cash flow (d)
taxes
16. The Keynesian consumption function is based on the belief that people’s consumption spending depend on their
-------- (a) future income (b) expected wealth (c) current income (d) additional income
17. The consumption expenditure that does not depend on income is ----------- (a) invalid consumption (b) flow
consumption (c) autonomous consumption (d) exogenous consumption
18. What effect does increasing government spending and lowering taxes has in the economy? (a) creates a recession
(b) no effect (c) increases aggregate demand (d) decreases aggregate demand
19. Keynes theory is called the theory of income and employment determination because ----- (a) they are determined
concurrently and by same factors (b) they mean the same (c) they are not far from each other (d) they are matches
for each other.
20. All payment made by entrepreneur to factors of production is ---------- (a) aggregate supply price (b) aggregate
demand Price (c) investment price (d) production price
21. The principle underlining the Keynes theory of employment is ----------- (a) effective supply (b) price stability (c)
cartel checks (d) effective demand
22. --------- offset fluctuation in economic activity without direct intervention by government or policy makers; (a)
balanced budget (b) budget multiplier (c) automatic stabilizer (d) none of the above
23. If nominal GDP is N1,100 and real GDP is N1,000, GDP deflator is ------- (a) 9.09 (b) 6.02 (c) 1.11 (d) 110
24. The labour force of Nigeria are -------- (a) those employed (b) the employed and the unemployed (c) those who are
of working age (d) the entire population
25. The balance budget multiplier is equal to 1 because; (a) ∆G = ∆T (b) multiplier =1-c/1-c (c) tax = government
spending (d) all of the above
26. The 450 represents ----------- (a) equal spending and income (b) less than unit gradient (c) slope more than 1
27. The two components of government spending are (a) govt. purchases and investment (b) govt. purchases and
transfer payment (c) govt. investment and transfer payment (d) govt. savings and transfer payment
28. The vertical and the horizontal axes of the aggregate demand graph are ------- (a) investment and consumption (b)
import and export (c) interest and inflation (d) expenditure and income
29. In the consumption equation C = a + bY, the range of the value of b is ------- (a) 0 ˃ b ˃ 1 (b) 0 < b < 1 (c) 0 < b >
1 (d) 0 > b < 1
30. Keynes believe that during depression there should be adequate ----------- (a) savings (b) spending (c) withdrawals
(d) and reckless spending
31. J B. Say postulated a law that states --------- (a) market sell its goods (b) supply creates its own demand (c)
household produce and consume (d) society is revolving
32. In the circular flow diagram, which of the following is true in resource or factor market? (a) households buy
resources from business firm (b) households sell products to firms (c) households sell resources to firms (d) firms
sell goods and services to households.
33. According to Keynes, to encourage investment government should ---------- (a) encourage consumption (b) charge
low interest rate (c) pay high wages (d) create more employment

34. When saving is greater than investment in a two-sector model, (a) output should increase (b) output should
decrease (c) output should not change (d) output doubles
35. In a two-sector model, if consumption is 40 + 0.90Yd and I = 50, what is the equilibrium output? (a) 90 (b) 400 (c)
500 (d) 900
36. By definition, the marginal propensity to consume is; (a) ∆C/∆Y (b) c in C = C + cYd (c) slope of the consumption
function (d) all of the above
37. In order to illustrate the determination of GDP via equality of injection and leakage the expression S+T+IM =
I+G+X is rearranged as (a) S+(G-T) = I+(X-IM) (b) S+(T-G) = I+(X-IM) (c) S+(T-G) = I+(IM-X) (d) S+(G-T) =
I+(IM-X)
38. An increase in lump-sum tax, ceteris paribus, causes the; (a) C+I+G to shift upward by c∆Tx (b) C+I+G to shift
downward by c∆Tx (c) S+Tx to shift upward by c∆Tx (d) S+Tx to shift downward by c∆Tx
39. According to the quantity theory of money, (a) ∆M lead to ∆P (b) ∆P lead to ∆M (c) ∆P lead to ∆V (d) ∆M lead to
∆T
40. Increase in money supply may not lead to increase price according to Fisher because; (a) velocity of money may
increase (b) time of transaction may be fast (c) output may subdue money supply (d) all of the above
41. According to permanent income hypothesis, (a) permanent income are saved (b) permanent income are consumed
(c) transitory income are saved (d) transitory income are consumed
42. The life cycle hypothesis consumption is related to; (a) current income (b) past peak income (c) expected life
income (d) price expectations over one’s lifetime
43. The user cost of capital is; (a) real rate of interest (b) the nominal rate of interest (c) the real rate of interest + the
rate of depreciation (d) the nominal rate of interest + the rate of interest
44. In a private sector model, (a) household saving is a leakage from the circular flow (b) investment is a spending
injection (c) saving leakage = investment injection (d) all of of the above
45. In an open economy, GDP is given as; (a) C+I gross+G+(M-X) (b) C+Inet+G+(M-X) (c) C+Igross+G+Egross (d) wage,
rent ,interest, profit and depreciation
46. The difference between GDP and GNP is; (a) income within (b) income from abroad (c) depreciation (d)
consumption abroad
47. NNP + depreciation =, (a) GDP (b) NI (c) PI (d) GNP
48. Capital consumption allowance comprises of; (a) depreciation and investment (b) depreciation and damages to
goods (c) damages to goods and consumption (d) interest and depreciation
49. Statistical difference is; (a) difference in GDP calculation (b) manufactured number (c) unknown value (d) strange
figure
50. In the expenditure method of calculating GDP, receipt of factor income from the rest of the world is; (a) added (b)
divided (c) subtracted (d) multiplied
51. In the national income accounting, wage, rent, interest and profit are regarded as; (a) labour, land, capital and
entrepreneur’s income (b) production income (c) factors’ income (d) input income
52. GDP/population is; (a) per capita income (b) labor performance (c) capital performance (d) none of the above
53. Goods produced but not sold in GDP is; (a) an expenditure (b) an income (c) depreciation (d) interest
54. The formula for NNP is; (a) NI –PI (b) GDP – NI (c) GNP – CCA (d) PI – NI
55. Retained earnings is; (a) Profit undistributed (d) company’s savings (d) income not intended to be shared (d) all of
the above
56. Given MV = PT, (a) M is inversely proportional to P (b) M is directly related to P (c) M is inversely related to T
(d) M is neutrally connected to P
57. One of the following is a problem of national income measurement; (a) monetized sector (b) non-monetized sector
(c) literacy (d) legally earned income
58. Net factor income from abroad could be; (a) negative (b) positive (c) zero (d) all of the above
59. Total investment spending is also called; (a) gross capital formation (b) net capital formation (c) average capital
formation (d) input capital formation
60. In national income accounting, intermediate goods are differentiated from finished goods to ensure goods are not;
(a) double counted (b) wasted (c) stocked (d) none of the above
61. According to Keynes, equilibrium can be attained when; (a) spending ˃ income (b) income < expenditure (c)
expenditure = income (d) none of the above
62. The aggregate demand of a closed and simple economy is; (a) C+I (b) C+I+G (c) C+I+G+M (d) C+I+G+M-X
63. Given MPC = 0.8, the value of the multiplier is; (a) 4 (b) 10 (c) 5 (d) 7
64. In the consumption function C = 200 + 0.50Y, what is the MPC? (a) 200 (b) 0.50 (c) 200.50 (d) 2
65. When high taxes are imposed by government, (a) price increases (b) purchasing power reduces (c) aggregate
demand shift downward (d) all of the above
66. During inflation, government uses -------- as fiscal policy option (a) budget deficit (b) budget surplus (c) balanced
budget (d) none of the above
67. When imports and exports are equal what happens to the foreign reserve of the country? (a) it increases (b) it
decreases (c) it does not change (d) it zero
68. A country that experiences surplus of exports over import has a; (a) surplus trade balance (b) favourable balance of
payment (c) foreign reserve increased (d) all of the above
69. Savings is given as; (a) S = Y-C (b) Y-I (c) C+c (d) Y+C
70. The aggregate demand graph does not pass through the origin due to; (a) private consumption (b) constant
consumption (c) autonomous consumption (d) influenced consumption