Question 1 of 25

2 Points

As income declines due to a decrease in autonomous net exports, induced imports will _____.

• A. increase
• B. decrease
• C. remain unchanged
• D. increase by the same value as increase in income

Question 2 of 25

2 Points

If the multiplier in an economy is 5, a R20 billion increase in net exports will...

• A. reduce GDP by R20 billion.
• B. increase GDP by R100 billion.
• C. increase GDP by R20 billion.
• D. the multiplier does not have an effect on net exports.
• E. decrease GDP by R100 billion.

Question 3 of 25

2 Points

In an open economy, the depreciation of the rand against the dollar would result in ...

• A. a decrease in the equilibrium level of income.
• B. an increase in the equilibrium level of income.
• C. a decrease in aggregate expenditure.
• D. a decrease in net exports.

Question 4 of 25

2 Points

Other things equal, a reduction in personal and business taxes can be expected to ...

• A. decrease aggregate demand and increase aggregate supply.
• B. increase aggregate demand and decrease total real production.
• C. increase both aggregate demand and total real production.
• D. decrease both aggregate demand and aggregate supply.

Question 5 of 25

2 Points

In the AD-AS model, a simultaneous decrease in output and price level in the economy is an outcome of...

• A. a reduction in wage rates bargained by labor unions
• B. an increase in the costs of production.
• C. contractionary demand management policies.
• D. a supply shock.

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Question 6 of 25

2 Points

In the AD-AS model, the aggregate supply curve is upward sloping because...

• A. as the price level increases, total production decreases.
• B. as the price level decreases, total production decreases.
• C. it illustrates a negative relationship between the total real output supplied and the price level.
• D. as the price of a good increase, quantity supplied increases.

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