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Choose the most appropriate answer

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Choose the most appropriate answer. Write down numbers 1 to 25 in your answer book and next to each number write the letter that represents the correct answer. E.g. 26 B 1. Study the diagram below and answer the question. A-C+1 ? C+1 21 Which one of the following statements is false? (4 marks) AY1 represents the equilibrium level of income. B The curve labelled A = C + 1 shows the total of consumption and investment spending. The curve labelled C shows the total of autonomous and induced consumption spending. D The point labelled D shows where savings equal investment 2. In macroeconomic theory, total or aggregate spending is denoted by A and total or aggregate production of income by Y. Which one of the following statements is incorrect? (4 marks) A When A is greater than Y, there is disequilibrium and Y will tend to increase. B When A is equal to Y, there is equilibrium and Y will remain unchanged. C When A is less than Y, there is disequilibrium and will decrease. D When A is greater than Y, there is disequilibrium and A will decrease. 3. Simon borrowed R10 000 from the bank at the end of 2011 at a fixed interest rate of 20%. At the end of 2012, the inflation rate was 25%. Inflation has been to Simon; the real value of his loan plus interest payments changed to (4 marks) A Beneficial: R9 600 B Beneficial: R4 800 C Beneficial: R8 000 D Costly: R12 500
4. Which one of the following statements is INCORRECT? (4 marks) A Keynesian economists believe that the business cycle is caused by external factors, such as government interference in the economy. B Classical economists believe that market economies are inherently stable and fluctuations are ascribed to exogenous factors. C Classical economists believe that government should not intervene in the economy to try to smooth out the business cycle. D Structuralist economists believe that the market system is neither inherently stable nor systematically unstable. 5. Consider the case of two countries, Afghanistan and the US, both producing carpets and fighter aircraft The table below shows output rates per day in the two countries if all resources are fully and efficiently employed. Use this information to answer the question. Carpets Fighter aircraft Afghanistan 100 US 500 25 An appropriate international exchange ratio that would allow mutually advantageous trade to take place would be: (4 marks) A 1 aircraft = 25 carpets. B 1 aircraft = 20 carpets. C 1 carpet = 4 aircrafts. D1 aircraft = 22 carpets (4 marks) 6. The demand for money arises out of the need to hold money as a medium of exchange. This demand for money is a function of A Precautionary: interest rates B Transactions; national income Speculative; interest rates D Precautionary, national income 7. As the interest rate to hold money. the opportunity cost of holding money and individuals choose (4 marks) A increases, increases, more B decreases, decreases, more Cincreases, decreases, less D decreases, increases, more
8. Use the information given in the table below to answer the question Year 2000 2002 2004 | ??? 100 125 135 Consumer prices (4 marks) A Rose by 10% from 2002 to 2004 B Fell by 25% from 2000 to 2002 C Fell by 10% from 2002 to 2004 D Rose by 8% from 2002 to 2004 9. Use the information given in the table below to answer the question Computers Shoes United States 3 South Africa 1 3 pairs 6 pairs (4 marks) Which country or countries have an absolute advantage and comparative advantage in shoes? A South Africa has an absolute and comparative advantage in shoes B The United States has an absolute and comparative advantage in shoes. C The United States has a comparative advantage and South Africa has an absolute advantage in shoes D South Africa has a comparative advantage and the United States has an absolute advantage in shoes 10. When aggregate planned expenditure is less than GDP, there is an unintended in inventories, firm's -production and GDP begins to (4 marks) A Decrease increase, increase B Increase, decrease, decrease C Increase, decrease, increase D Decrease, Increase, decrease
11. Complete the following sentence: in in aggregate In terms of the AD-AS model, a decrease in the interest rate leads to an) investment spending an). in aggregate spending, a(n) demand and, eventually to an) in total production and (or) an). in the price level (4 marks) A Decrease; decrease; decrease; decrease, decrease B Increase; increase; increase: increase increase C Increase; Increase; decrease; decrease; decrease D Decrease; decrease; increase; increase; increase 12. A justification for government intervention in the economy arises from the fact that market systems usually produce outcomes, but they do not necessarily produce outcomes. (4 marks) A Efficient, equitable B Equitable; efficient C Efficient, profitable D Profitable; equitable 13. When the government uses its overdraft facilities at the central bank, it in the economy. This is called financing the quantity of money (4 marks) A Increases; deflationary B Decreases; inflationary C Decreases; deflationary D Increases; Inflationary 14. If the expected inflation rate is 5% and negotiators agree that the real wages should rise by 7%, the two sides will agree to an increase in the money wage of (4 marks) A 2% B 5% C 7% D 12% 1
15. Consider the case of two countries, Mauritius and South Africa, both producing rum and cloth. If all resources are fully and efficiently employed, one worker in Mauritius can produce 270 units of rum or 30m of cloth per week, while one worker in South Africa can produce 320 units of rum or 40m of cloth per week. Rum Cloth Mauritius 270 30 South Africa 320 40 Based on this information: (4 marks) A South Africa has an absolute advantage in the production of rum only. B Mauritius should import rum from South Africa. C Mauritius has a comparative advantage in the production of cloth. D South Africa should export doth to Mauritius 16. The macroeconomic view of a trade deficit implies that, other things equal, the imposition of a tariff will reduce South Africa's trade deficit (4 marks) A Because exports will be promoted and imports cannot possibly change B Because Imports will be reduced and exports cannot possibly change C Only if the tariff has no impact on South Africa's spending or income D Only if the tariff leads to increased income in South Africa relative to its spending 17. Consider the case of two countries, Afghanistan and the US, both producing carpets and fighter aircraft. The table below shows output rates per day in the two countries if all resources are fully and efficiently employed. Use this information to answer the question. Carpets Fighter aircraft Afghanistan 100 US 500 25 (4 marks) Afghanistan raised its aircraft productivity to 5 units per day, then A Mutually beneficial trade would no longer be possible. B Afghanistan would continue to import fighter aircraft from the US Afghanistan should switch from the export of carpets to the export of aircraft D The US would retain its comparative advantage in carpet manufacture
18. If more American tourists visit South Africa. The in the rand/dollar exchange rate of dollars increases and the dollar (4 marks) A Supply, depreciates B Demand, depreciates C Supply appreciates D Demand appreciates 19. In balance-of-payments accounting, the sale of a foreign production facility by a SA firm is a item in the SA balance of payments; the deposit of funds in a foreign bank account by a SA citizen item in the SA balance of payments. (4 marks) A Debit also is a debit B Debit; is a credit C Credit; is a debit D Credit; also is a credit 20. The table below shows a section of the national accounts for a small country in 2018. Answer the question that follows using the information provided in the table. Consumption expenditure Government expenditure Depreciation Exports Imports Gross capital formation (investment) Primary income payments Primary income receipts 9 800 3500 500 2 200 1 900 2 500 300 200 The value of Gross Domestic Product (GDP) is: (4 marks) A 16 100 B 19900 C 16 600 D15600 21. To calculate gross national income (GNI) from gross domestic product (GDP), must be added and must be subtracted from GDP. (4 marks) A Primary income payments; primary income receipts B Primary income receipts: primary income payments C Subsidies for local production; tariffs on production from the rest of the world D Taxes from the rest of the world subsidies received from the rest of the world
22. In a country with a population of 50 million people, there are 20 million children under the age of 15 years, 16 million employed, 9 million pensioners, 4 million unemployed and 1 million people who are physically unable to work. The unemployment rate in this country equals (4 marks) A 10% B 13,3%. C 20% D 25%. 23. Refer to the table below that contains information about the Consumer Price Index in Mythopia, in order to answer the question Year 2010 2011 2012 Consumer Price Index 100,0 112,1 120,8 The unit of currency in Mythopia is the Myth. Between 2010 and 2012, the purchasing power of the consumer's Myth (4 marks) A Decreased to 20,8 cents. B Decreased to 120,8 cents. C Decreased to 83 cents. D Decreased to 93 cents. 24. Suppose the SARB decrease interest rates while oil prices is increasing. What would be the expected effect on real GDP and the price level? (4 marks) Option 1 2 3 4 Price level Uncertain Increase decreases Increases Real GDP decreases uncertain decreases decreases A Option 1 B Option 2 C Option 3 D Option 4 25. Which one of the following statements is INCORRECT? (4 marks) A The level of autonomous consumption is determined by the non-income determinants of consumption spending. B The impact of a change in one or more of the non-income determinants of consumption can be illustrated by a shift of the consumption function. C The level of autonomous consumption determines the position of the consumption function D Investment spending is the most stable component of aggregate spending in the economy. END OF PAPER