1.Complete the following sentence:

In terms of the AD-AS model, a decrease in the interest rate leads to a(n) _______________ ininvestment spending, a(n) _______________ in aggregate spending, a(n) ______________ in aggregatedemand and, eventually to a(n)________________ in total production and (or) a(n) _______________ in the price level.

A. Decrease; decrease; decrease; decrease; decrease

B. Increase; increase; increase; increase; increase

C. Increase; increase; decrease; decrease; decrease

D. Decrease; decrease; increase; increase; increase

2.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.

A. Efficient; equitable

B. Equitable; efficient

C. Efficient; profitable

D. Profitable; equitable

3. When the government uses its overdraft facilities at the central bank, it ___________ the quantity of moneyin the economy. This is called ___________________ financing.

A. Increases; deflationary

B. Decreases; inflationary

C. Decreases; deflationary

D. Increases; inflationary

4. 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

A. 2%

B. 5 %

C 7 %

D. 12%

5. The macroeconomic view of a trade deficit implies that, other things equal, the imposition of a tariff will reduce South Africa's trade deficit

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

6. If more American tourists visit South Africa. The _____________________ of dollars increases and the dollar in the rand/dollar exchange rate _____________________.

A. Supply; depreciates

B. Demand; depreciates

C. Supply; appreciates

D. Demand; appreciates

7. 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.

A. Debit; also is a debit

B. Debit; is a credit

C. Credit; is a debit

D. Credit; also is a credit

8. To calculate gross national income (GNI) from gross domestic product (GDP), ___________________must be added and _________________________ must be subtracted from GDP.

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

9. 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 physicallyunable to work. The unemployment rate in this country equals

A. 10%.

B. 13,3%.

C.20%.

D.25%.

10. Which one of the following statements is INCORRECT?

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.