Question

1.1 The rise in the value of one currency in relation to another is:

a) Depreciation of the currency.

b) An appreciation of the currency.

c) A debasement of the currency.

d) A weakening of the currency.

1.2 Which of the following does NOT represent a key macroeconomic variable?

a) The unemployment rate.

b) The inflation rate.

c) Gross Domestic Product (GDP).

d) The population growth rate.

1.3 The inflation rate is measured by:

a) The ratio of current year CPI to base year CPI.

b) The percentage change in the CPI from one year to the next.

c) The percentage change in GDP from one year to the next.

d) The ratio of current year CPI to the next year’s CPI.

e) The ratio of current year PPI to the next year’s PPI.

1.4 A consumer’s real purchasing power refers to:

a) The nominal income level of the consumer.

b) Wage income earned through employment.

c) The maximum volume of goods and services that the consumer can buy.

d) Nominal GDP per capita.

1.5 Keynesians believe that the fluctuations in economic activity (business cycles):

a) are caused by external factors such as the inappropriate use of government policy.

b) are caused by changes in weather patterns.

c) are caused by structural or institutional changes.

d) occur naturally in economies and require government intervention.

1.6 Which of the following is NOT a legitimate area of intervention by government in a mixed economy?

a) Regulation of the pricing behaviour of monopoly industries.

b) Regulation of price increases that result from changes in patterns of demand and supply in competitive markets.

c) Stabilisation of the economy during periods of cyclical instability.

d) Redistribution of purchasing power via progressive taxation and transfers.

1.7 A depreciation of the rand may have inflationary consequences in South Africa because it:

a) Increases the costs of exports.

b) Discourages savings.

c) Decreases the international competitiveness of South African producers.

d) Increases the costs of imported goods.

1.8 Which of the following statements is incorrect?

a) Cost-push inflation is associated with rising prices and declining unemployment.

b) Attempts to decrease cost-push inflation by restrictive monetary or fiscal policy are likely to produce even greater unemployment.

c) Cost-push inflation may result from firms increasing their profit margins.

d) Cost-push inflation may follow from a depreciation of the domestic currency against the currencies of the country’s major trading partners.

1.9 If a country’s rate of unemployment increases then we can conclude that:

a) The country is experiencing jobless growth. b) No new jobs are being created.

c) The proportion of people of working age who want employment and who cannot find employment is increasing.

d) All of the above are true.

1.10 A tariff is:

a) A tax on exported goods.

b) A source of revenue to the exporting nation.

c) A tax on imported goods.

d) A tax on foreign property.

Answer 1

1.1 The rise in the value of one currency in relation to another is:

b) An appreciation of the currency.

1.2 the following does NOT represent a key macroeconomic variable?

c) Gross Domestic Product (GDP)

1.3 The inflation rate is measured by:

b) The percentage change in the CPI from one year to the next.

1.4 A consumer’s real purchasing power refers to:

c) The maximum volume of goods and services that the consumer can buy.

1.5 Keynesians believe that the fluctuations in economic activity (business cycles):

d) occur naturally in economies and require government intervention.

1.6 Which of the following is NOT a legitimate area of intervention by government in a mixed economy?

b) Regulation of price increases that result from changes in patterns of demand and supply in competitive markets.

1.7 A depreciation of the rand may have inflationary consequences in South Africa because it:

d) Increases the costs of imported goods.