Question

1. In 2020, production of soya beans is 351 416 tons and in 2019, total production was 267 490 tons. The price of soya beans at beginning of 2020 was K4 400/ton and at beginning of 2019, price was K1 400/ton. Explain this scenario within context of demand and supply. What do you think will happen to price of soya beans in 2021 and why?
2. How is monetary policy used to stimulate economic activity? Use examples with respect to Zambia (not more than 2000 words).

3. 1.            The law of demand states that:

   a)            There is a direct or positive relationship between the price of a commodity and the quantity demanded.

   b)            The quantity demanded will be higher the lower is its price.

   c)            The quantity demanded will be lower the lower is its price.

   d)            The quantity demanded will be higher the higher is its price.

   2.            The law of supply states that:

   a)            There is a direct or positive relationship between the quantity supplied of a good or service and its price.

   b)            The higher the price of a good and service, the lower the amount supplied.

   c)            The lower the price of a good or service, the more quantity is supplied.

   d)            Supply is higher than demand at the equilibrium price.

   3.            The quantity demanded of Pepsi has decreased. The best explanation for this is that:

   a)            The price of Pepsi increased.

   b)            Pepsi consumers had an increase in income.

   c)            Pepsi's advertising is not as effective as in the past.

   d)            The price of Coca Cola has increased.

   4.            Market equilibrium exists when _____________ at the prevailing price.

   a)            quantity demanded is less than quantity supplied

   b)            quantity supplied is greater than quantity demanded

   c)            quantity demanded equals quantity supplied

   d)            quantity demanded is greater than quantity supplied

   5.            A movement along the demand curve to the left may be caused by:

   a)            A decrease in supply.

   b)            A rise in the price of inputs.

   c)            A fall in the number of substitute goods.

   d)            A rise in income.

   6.            Injections of money:

   a)            Decrease aggregate demand

   b)            Always equal savings

   c)            Always equal national income

   d)            Include investment and export spending

   7.            An increase in national income is:

   a)            Likely to increase exports

   b)            Likely to decrease savings

   c)            Likely to decrease investment

   d)            Likely to increase spending on imports

   8.            An increase in national income is likely to:

   a)            Decrease tax receipts

   b)            Worsen the trade position

   c)            Automatically cause an increase in government spending

   d)            Cause an increase in injections into the economy

   9.            A significant increase in the government budget deficit is likely to:

   a)            Reduce injections into the economy

   b)            Reduce national income

   c)            Move the economy away from full employment

   d)            Boost aggregate demand

   10.          If injections of money are greater than withdrawals:

   a)            National income is likely to increase

   b)            National income is likely to decrease

   c)            National income will stay in equilibrium

   d)            Prices will fall

   11.          In the circular flow of income model injections:

   a)            Are assumed to be exogeneous (independent of national income)

   b)            Are assumed to be a function of national income

   c)            Decrease aggregate demand

   d)            Decrease the investment into an economy

   12.          For equilibrium in an open four sector economy:

   a)            Actual injections = actual withdrawals

   b)            Planned injections = planned withdrawals

   c)            Savings = investment

   d)            Government spending = tax revenue

   13.          A reflationary (expansionist) policy:

   a)            Increases aggregate supply

   b)            Increases aggregate demand

   c)            Decreases the price level

   d)            Increases full employment

   14.          A reflationary policy could include:

   a)            decreasing injections

   b)            increasing taxation rates

   c)            increasing interest rates

   d)            increasing government spending

   15.          Which of the following is an injection into the economy?

   a)            Investment

   b)            Savings

   c)            Taxation

   d)            Import spending

   16.          Which of the following is a characteristic of a perfectly competitive market?

   a)            Firms are price setters.

   b)            There are few sellers in the market.

   c)            Firms can exit and enter the market freely.

   d)            All of these

   17.          Which of the following is NOT a feature of monopolistic competition?

   a)            Numerous sellers

   b)            Product differentiation

   c)            Numerous buyers

   d)            Homogenous products

   18.          In which form of market structure would price be the key factor when competing?

   a)            Monopoly

   b)            Oligopoly

   c)            Monopolistic Competition

   d)            Perfect Competition

   19.          When the market is run by a small number of firms that together control the majority of market share is known as

   a)            Oligopoly

   b)            Duopoly

   c)            Oligopsony

   d)            Perfect Competition

   20.          “Image building” objectives are common in _____ type of market structure?

   a)            Perfect Competition

   b)            Oligopoly

   c)            Monopsony

   d)            Monopoly

Answer 1

SOLUTION :

(1). The law of demand states that:

HENCE Option "B","The quantity demanded will be higher the lower is its price" is correct answer.

(2). The law of supply states that:

HENCE Option "A","There is a direct or positive relationship between the quantity supplied of a good or service and its price." is correct answer.

(3). The quantity demanded of Pepsi has decreased. The best explanation for this is that:

HENCE Option "A","The price of Pepsi increased" is correct answer.

(4). Market equilibrium exists when _____________ at the prevailing price.

HENCE Option "C"," quantity demanded equals quantity supplied"is correct answer.

​​​​​​(5). A movement along the demand curve to the left may be caused by:

HENCE Option "D"," A rise in income" is correct answer.

(6). Injections of money:

HENCE Option "D","Include investment and export spending" is correct answer.

(7). An increase in national income is:

HENCE option "A","Likely to increase exports " is correct answer.

(8). An increase in national income is likely to:

HENCE Option "D","Cause an increase in injections into the economy" is correct answer.

(9). A significant increase in the government budget deficit is likely to:

HENCE Option "A","Reduce injections into the economy " is correct answer.

(10). If injections of money are greater than withdrawals:

HENCE Option "B","National income is likely to decrease" is correct answer.

(11).In the circular flow of income model injections:

HENCE Option "B"," Are assumed to be a function of national income" is correct answer.

(12).For equilibrium in an open four sector economy:

HENCE Option "A","Actual injections = actual withdrawals" is correct answer.

(13). A reflationary (expansionist) policy:

HENCE Option "A","Increases aggregate supply "is correct answer.

(14).A reflationary policy could include:

HENCE option "D","increasing government spending"is correct answer.

(15). Which of the following is an injection into the economy?

HENCE Option "A","Investment" is correct answer.

(16).Which of the following is a characteristic of a perfectly competitive market?

HENCE Option "C","Firms can exit and enter the market freely"is correct answer.

(17). Which of the following is NOT a feature of monopolistic competition?

HENCE Option "A","Numerous sellers" is correct answer.

(18). In which form of market structure would price be the key factor when competing?

HENCE Option "C"," Monopolistic Competition" is correct answer.

(19). When the market is run by a small number of firms that together control the majority of market share is known as

HENCE Option "A"," Oligopoly " is correct answer.

(20). “Image building” objectives are common in _____ type of market structure?

HENCE Option "A","Perfect Competition "is correct answer.