MACROECONOMICS (MULTIPLE CHOICE)
d) Which of the following statements is incorrect? (1%) Keynesian economists suggest that time lags and the multiplier effect may give rise to business cycles. Keynesian economists suggest that periodic changes in solar radiation may be one cause of business cycles. Classical economists ascribe uctuations to forces outside the market system. Classical economists believe that market economies are intrinsically stable and that the government should not intervene in the economy to try to smooth out the business cycle. One reason the aggregate demand curve slopes downward is that (172) a rise in the price level causes a surplus of money that drives interest rates up and thus discourages interest-sensitive expenditures. a fall in the price level creates a shortage of money that drives interest rates up and thus encourages exports. an increase in output causes interest rates to fall and aggregate expenditures to rise. a rise in the price level creates a shortage of money that drives interest rates up and thus discourages interest-sensitive expenditures. In 2019 Cyclone ldai made landfall in Mozambique. This resulted in an adverse supply shock. Assume that the Bank of Mozambique, the country's central bank, decided to immediately accommodate the shock. What path would the country's price level and national income follow? (11/2) Y: 105, 98, 98; P: 1.3, 1.5, 1.5 Y: 105, 98, 105; P: 1.3, 1.3, 0.95 Y: 105, 105,105; P: 1.3,1.3,1.3 Y: 105, 105,105; P: 1.3, 1.5.1.5 Data reveals that the actual unemployment rate in LetabaVille is 15%. Potential GDP is R12 000. However, real GDP is only equal to R11 160. You thus conclude that the natural rate of unemployment is . (11/5) 3.5% 7%. 11.5%. 14%. The aggregate supply curve relating the price level to output has three distinguishing segments. Which one of the following statements correctly describes all three segments? (11/2) The horizontal segment reects the availability of unused resources. The upward- sloping segment indicates that the economy is operating at full-employment. Finns' willingness to pay higher wages to secure more labour is reected in the vertical segment. The horizontal segment indicates that the economy is operating at fullemployment. Firms' willingness to pay higher wages to secure more labour is reected in the upward- sloping segment. The vertical segment reects the availability of unused resources. Firms' willingness to pay higher wages to secure more labour is reected in the horizontal segment. The upwardsloping segment reects the availability of unused resources. The vertical segment indicates that the economy is operating at full- employment. The horizontal segment reects the availability of unused resources. Firms' willingness to pay higher wages to secure more labour is reected in the upwardsloping segment. The vertical segment indicates that the economy is operating at full-employment. 46. Refer to the table below. Income (Y) Consumption Investment (I) Government expenditure (C) expenditure (G) 300 350 50 1 50 400 400 50 1 50 500 450 50 1 50 600 500 50 1 50 700 550 50 1 50 800 600 50 1 50 900 650 50 1 50 The above table gives data for Zambezia. There are no imports into or exports from Zambezia. If real GDP is equal to R600 then (11/2) a) unplanned inventory is -R100. Firms in Zambezia will increase production. b) unplanned inventory is R100. Firms in Zambezia will decrease production. c) unplanned inventory is -R200. Firms in Zambezia will increase production. d) unplanned inventory is R200. Firms in Zambezia will decrease production. 47. Consider the gure below. Planned " expenditure 1 3383333838 010203040506070W901W110 Income, output Which of the following statements islare correct? (116) (1) In the diagram above, where the planned expenditure function intersects the 45-degree line savin will be zero. (3) An increased income tax will cause the planned expenditure curve to become steeper. a) Options 1,2 and 3 are correct. b) Options 2 and 3 are correct. c) Options 1 and 2 are correct. d} Option 3 is correct. 49. a} b) c) d) 50. If autonomous consumption decreases, which of the following combinations of events would be most likely to occur? An upward shift of the planned expenditure curve, a rightward shift of the money demand curve, and a leftward shift of the l8 curve. A downward shift of the panned expenditure curve, a leftward shift of the money demand curve, and a leftward shift of the lS curve. A downward shift of the planned expenditure curve, a leftward shift of the money demand curve, and a rightward shift of the IS curve. A downward shift of the planned expenditure curve, a rightward shift of the money demand curve, and a rightward shift of the :8 curve. If the SARB adopts a rule to accommodate supply shocks so that the change in interest rates, as a result of a supply shock, is not as great as it would have been, then you would expect to see, using an iS-LM approach (1%) aggregate demand to be steeper when drawn in the price-output space. aggregate demand to be less steep when drawn in the price-output space. aggregate supply to be, in the long run, steeper when drawn in the price-output space. aggregate supply to be, in the long run, less steep when drawn in the price-output space. Over a period the Diba'v'ille Reserve Bank reduced inflation by 7.5 percentage points. During this same period the unemployment rate rose by 11.25%. You therefore conclude that the sacrice ratio is (1%) 1.5. 3. 3.?5. 22.5. WakeMeUp sells coffee at R10 a cup. WakeMeUp only sell their brand of coffee via vending machines at academic institutions. The owner of WakeMeUp had made her pricing decisions based on the expectation that the price level would rise by 8%. However, data reveals that price level rose by 4%. WakeMeUp thus have (1%) prices that are higher than desired, which increases their sales and depletes their inventory. prices that are higher than desired, which lowers their sales and causes their inventory to accumulate. prices that are lower than desired, which increases their sales and depletes their inventory. prices that are lower than desired, which lowers their sales and causes their inventory to accumulate. Assume that an economy has the Phillips curve I: = Tif_1 0.3 (u 18). How much cyclical unemployment is needed to reduce inflation by 3.6 percentage points? (1%) 2.25. 12. 18. 30
