Exam (elaborations)
ECS 2602 Macroeconomics (270 MCQ with answers)
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Macroeconomics (270 MCQ with answers)
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Assessment 1 – first attemptQuestion 1
Which one of the following statements is correct?
Select one:
a) Inflation targeting is an example of a stabilisation policy.
b) A contractionary monetary policy implies a decrease in the interest rate to
increase the money supply.
c) An increase in taxes implies the implementation of expansionary fiscal policy.
d) decrease in the interest rate implies the implementation of expansionary
monetary policy.
Question 2
Gross domestic product (GDP) …
Select one:
a) is the broadest, best-known, and most used measure of economic activity
expressed in real or nominal prices.
b) is the total value of all goods and services produced within a country's
boundaries in a particular period.
c) includes imports of goods and services.
d) at current prices takes a continuous and considerable rise in the prices of goods
and services into consideration.
Question 3
Given the following consumption function, C = 100 + 0.8Y D, calculate how much
induced consumption spending will decrease if the government increases taxes by
R100.
Select one:
a) R100
b) R180
c) R80
d) R200
Question 4
Expenditure on the gross domestic product in South Africa is spending on goods and
services produced within the borders of South Africa …
Select one:
a) excluding exports and including imports.
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, b) excluding imports and including exports.
c) excluding exports and imports.
d) including exports and imports.
Question 5
This question is based on the following data for country PORTHOS for 2020.
Marginal propensity to consume = 0.5
Autonomous consumption = R600 million
Investment spending = R40 million
Government spending = R280 million
Taxes = R300 million
An economist Dr Bright Sithole calculated that the gap between the current equilibrium
level of output and income and the full employment level of income is R110 million.
By how much must government spending increase to reach full employment?
Select one:
a) 770 million
b) 55 million
c) 220 million
d) 110 million
Question 6
Assume that a budget deficit occurs in Country Balali. To reduce this budget deficit,
the Minister of Finance can …
Select one:
a) implement a contractionary fiscal policy.
b) decrease taxes and increase government spending.
c) increase in the interest rate in the economy.
d) influence the exchange rate to stimulate exports.
Question 7
Which one of the following statements is INCORRECT in terms of the goods market
model?
Select one:
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, a) The demand for goods determines the number of goods producers produce,
and they will only change their production if the demand for goods changes.
b) Autonomous consumption is represented by c0 + Ī + G – cT.
c) Induced consumption is presented by cYD.
d) Equilibrium is presented by Y = c0 + c(Y−T) + Ī + G.
Question 8
Given that co = 800, Ī = 600, G = 700, c = 0.8 and T = 400 the equilibrium level of
output and income is equal to ...
Select one:
a) R2 100
b) R12 500
c) R8 900
d) R12 100
Question 9
This question is based on the following data for country PORTHOS for 2020.
Marginal propensity to consume = 0.5
Autonomous consumption = R600 million
Investment spending = R40 million
Government spending = R280 million
Taxes = R300 million
An economist Dr Bright Sithole calculated that the gap between the current equilibrium
level of output and income and the full employment level of income is R110 million.
By how much must taxes decrease to reach full employment?
Select one:
a) 770 million
b) 220 million
c) 55 million
d) 110 million
Question 10
If an excess demand exists on the goods market, which one of the following chain of
events represents an adjustment to equilibrium?
Select one:
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, a) Y↑ → C↑ → Z↑
b) Y↓ → C↓ → Z↓
c) G↑ → C↑ → Z↑
d) T↓ → C↑ → Z↑
Question 11
If Z > Y, it means that there is:
Select one:
a) An excess supply of goods.
Y↓ → C↓ → Z↓
b) An excess demand for goods.
Y↑ → C↑ → Z↑
c) An excess demand for goods.
Y↓ → C↓ → Z↓
d) An excess supply of goods.
Y↓ → C↑ → Z↓
Question 12
This question is based on the following diagram. Assume that G and T increase by
R100.
Which one of the following statements is INCORRECT?
Select one:
a) If taxes then increase by R100, cT will be R80, the new equilibrium level of
output and income will be R1 100, and it will be represented by point c in the
above diagram.
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