PART A

ANSWER ALL QUESTIONS

1. Which of the following is not a function of money.
a. Hedge against inflation c. unit of account
b. Medium of exchange d. store of value
2. An example of fiat money is……….
a. Paper money c. sliver coins
b. Gold d. cigarette
3. Commodity money…………………………………
a. Has no intrinsic value
b. Is used exclusively in the economy of western Europe and north America
c. Has intrinsic value
d. Is used as reserves to back fiat money
4. The three main types of money are……………
a. Coin, currency and demand deposit
b. Government expenditures, taxation and reserve requirement
c. Fiat, commodity and deposit money
d. Money supply, government policy and taxation
5. Net exports are defined as imports minus exports.
a. True c. none of the above
b. False d. all of the above
6. Investment is……………………………
a. The purchase of goods and services
b. The purchase of capital equipment’s and structures
c. When we place our savings in the bank
d. The purchase of stocks and bonds
7. People who buy shares in a firm have loaned money to the firm.
a. True c. none of the above
b. False d. all of the above
8. A financial intermediary is the middleman between……………..
a. Buyers and sellers c. borrowers and lenders
b. Husbands and wives d. labour unions and firms
9. Gross domestic product (GDP) can be measured as the sum of………..
a. Consumption, investments, government purchases and net exports
b. Investment, wages, profits, and intermediate production
c. Consumption, transfer payments, wages and profits
d. Net national product, gross national product, and disposable personal income
10. Gross domestic product is the sum of the market value of the……………..
a. Intermediate goods c. manufactured goods
b. Final goods and services d. inferior goods and services
 11. The formula for GDP in the expenditure approach is ……………..
a. Y=C+G=I c. Y=X-M+C+G
b. Y=C+I d. Y=C+G+I+(X-N)
12. Final goods refer to those goods which are used either for………………….or ………………..
a. Consumption, investment c. consumption, resale
b. Resale, investment d. resale, further production
13. ………………………..is the net amount available to households for consumption and savings.
a. National income c. personal disposable income
b. Government income d. tax income
14. An example of a government expenditure is……………………..
a. An employment insurance check
b. Employing a public-school teacher
c. A social security payment to an elderly person
d. All of the above
15. Which of the following item is an investment.
a. Purchase of mutual fund
b. Purchase of a stock
c. Purchase of a new farm tractor
d. Purchase of a U. S. government bond
16. Trade/business cycle is divided into……..phase.
a. 4 c. 3
b. 6 d. 2

PART B
ANSWER ANY THREE QUESTIONS
1a. Define business cycle according to Keynes.
(b) State the phases of trade/business cycle
2a. what is the definition of GDP?
(b) How is GDP calculated using the expenditure approach?
©how is GDP calculated using income approach?
3.
Transfer of payments $54
Interest income (i) $150
Depreciation $36
Wages (W) $67
Gross private investment $124
Business profits (PR) $200
Indirect business taxes $74
Rental income (R) $75
Net exports $18
Net foreign factor income $12
Government purchases $156
Household consumptions $304
Use the above information to;
a. Calculate the GDP using expenditure approach/method
b. Calculate the GDP using income approach/method
4a. Define money
b.State the 4 types of money with examples