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DeadlineForSubmission:9thApril(HO,Sunyani,Tamale,Koforidua,Central)and16thApril(KumasiandAccra) MULTIPLECHOICE.Choosetheonealternativethatbestcompletesthestatementoranswersthequestion. 1) Ofthefollowing,modernmacroeconomicsisLEAST concernedwith A) inflation. B) populationgrowth. C) long-termeconomicgrowth. D) theunemploymentrate. 2) Economicgrowthismeasuredby A) changesinrealGDP. B) changesintheemploymentrate. C) changesinemployment. D) Alloftheaboveareusedtomeasureeconomicgrowth. 1)
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3) Intheabovefigure,economicgrowthcanberepresentedasthemovementfrom A) pointatopointb. B) pointc topointd. C) pointbtopointc. D) pointd topointa. 4) RealGDPisdefinedas A) thevalueoftotalproductionwhentheunemploymentrateis6percent. B) thevalueoftotalproductionofallthenationsfarms,factories,shopsandofficesmeasuredat thepricesoftheyearitwasproduced. C) thevalueoftotalproductionofallthenationsfarms,factories,shopsandofficesmeasuredin thepricesofasingleyear. D) anincreaseintheaveragelevelofprices.
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5) PotentialGDPis A) themaximumGDPthataneconomyactuallyachievesthroughoutitsentirehistory. B) thevalueofproductionwhenallthenationslabour,land,capital,andentrepreneurialability arefullyemployed. C) thelevelofGDPachievedduringperiodswhen100percentofthelabourforceisemployed. D) agoalthatcanneverbeachievedbytheeconomy. 6) Abusinesscycleisthe A) patternofshort-runupwardanddownwardmovementsintotaloutput. B) cyclicalmovementintheinterestrates. C) increaseinconsumerspendingthataccompaniesanincreaseindisposableincome. D) cyclicalchangeinthenationsbalanceoftrade. 7) Arecessionis A) aperiodduringwhichrealGDPincreasesforatleasttwosuccessivequarters. B) aperiodduringwhichrealGDPdecreasesforatleasttwosuccessivequarters. C) theupperturningpointofabusinesscycle. D) thelowerturningpointofabusinesscycle.
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8) Intheabovefigure,arecessionbeginsatpoint________andanexpansionbeginsatpoint ________. A) b;a B) d;c C) a;b D) b;c 9) OneofthecostsofmorerapidgrowthinGDPisthat A) toomanygoodseventuallyareavailableforconsumption. B) itdoesnotincreasethewealthavailableforall. C) peoplemustgiveupcurrentconsumption. D) moremoneyisavailableforresearchanddevelopment.
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10) Intheabovefigure,atroughisatpoint________andapeakisatpoint________. A) b;c B) b;a C) a;b D) d;c 11) Theunemploymentrategenerally________duringrecessionsand________duringexpansions. A) falls;falls B) falls;rises C) rises;falls D) rises;rises
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14) TheCPIcanbeusedtomeasure A) changesinaveragepriceofthegoodsandservicesboughtbyatypicalhousehold. B) expectationsofthefuturerateofinflation. C) theunemploymentratesofdiscouragedworkers. D) howretailunemploymenthaschanged. 15) Iftheinflationrateisnegative,the________isfallingandthereis________. A) pricelevel;inflation B) pricelevel;deflation C) unemploymentrate;inflation D) unemploymentrate;deflation 16) In2003theCPIwas108;in2004itwas112.Theinflationratebetween2003and2004was A) 4.0percent. B) 108percent. C) 112percent. D) 3.7percent. 17) Thepricelevellastyearwas120andthisyearis150.Whatistheinflationratebetweenthesetwo years? A) 2.5percent. B) 30percent. C) 25percent. D) 20percent. 18) IntheGhana,theinflationrate A) isalwaysrising. B) isalwaysfalling. C) risesandfallsovertheyears. D) remainsastable3percentovertheyears. 19) Inflationisaproblemwhenit A) divertsresourcesfromproductiveuses. B) causesthevalueofmoneytovaryunpredictably. C) isunpredictable. D) Alloftheaboveanswersarecorrect. 20) Themostserioustypeofinflationiscalled________,whichisdefinedasoccurringwhenthe inflationrateexceeds50percenta________. A) hyperinflation;year B) superinflation;month C) superinflation;year D) hyperinflation;month 21) Whenthegovernmentspendslessthanitcollectsintaxrevenue, A) ithasagovernmentbudgetsurplus. B) ithasagovernmentbudgetdeficit. C) itmustenactmonetarypolicy. D) itmustenactfiscalpolicy. 22) Thegovernmenthasabudgetdeficitwhengovernmentspending A) exceedstaxreceipts. B) islessthantaxreceipts. C) iszero. D) equalstaxreceipts. 23) IfthegovernmentbudgetdeficitstaysthesameandGDPincreases,then A) theratioofthedeficittoGDPstaysthesame. B) theratioofthedeficittoGDPdecreases. C) theratioofthedeficittoGDPincreases. D) withoutmoreinformation,itisimpossibletodetermineiftheratioofthedeficittoGDP increases,decreases,orstaysthesame.
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24) Whenweexportgoodstoforeigncountries,we A) increaseourinflationrate. B) makepaymentstotherestoftheworld. C) receivepaymentsfromtherestoftheworld. D) decreaseourinflationrate. 25) Thecurrentaccount A) ispartofGDP. B) doesnotaccountforinterestpaymentspaidtoandreceivedfromtherestoftheworld. C) measuresourexportsminusourimportstakingintoaccountinterestpaymentspaidtoand receivedfromtherestoftheworld. D) measuresourimportsminusourexports. 26) AllofthefollowingarepolicygoalstargetedbymacroeconomicpolicyEXCEPT A) increasethecurrentaccountdeficit. B) reduceunemployment. C) keepinflationlow. D) stabilizethebusinesscycle. 27) AllofthefollowingarepartoffiscalpolicyEXCEPT A) settinggovernmentspending. B) choosingthesizeofthegovernmentdeficit. C) settingtaxrates. D) controllingthequantityofmoney. 28) MonetarypolicyinGhanaiscontrolledby A) Parliament. C) theBankofGhana.
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29) WhichofthefollowingisapolicytooloftheBankofGhana? A) Changesininterestrates. B) Changesintaxes. C) Changesinthegovernmentdeficit. D) Changesingovernmentspending. 30) Theprincipalaimofmonetarypolicyisto A) keepthebudgetdeficitsmalland/orthebudgetsurpluslarge. B) maintainlowinflation. C) reversetheproductivitygrowthslowdown. D) lowertaxes. 31) Iftheeconomyisinarecession,themonetarypolicycommittee(MPC)might A) increasegovernmentspending. B) cuttaxestostimulatetheeconomy. C) increaseinterestrates. D) reduceinterestratestostimulatetheeconomy. 32) Grossdomesticproductisthetotal________producedwithinacountryinagiventimeperiod. A) amountoffinalandintermediategoodsandservices B) marketvalueofallfinalandintermediategoodsandservicesplusinvestmentand depreciation C) marketvalueofallfinalandintermediategoodsandservices D) marketvalueofallfinalgoodsandservices
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33) Inthecircularflowmodelofaneconomywithnogovernmentsectorandnointernationaltrade, households A) receiveincomefromproducersfortheuseoffactorsinthefactormarkets. B) receiveincomefrombuyersofgoodsandservices. C) payfirmsfortheuseoftheirfactors. D) receiveincomefromthesaleoffactorsinthegoodsmarkets. 34) IfGhanaimportsarelessthanexports,the A) restoftheworldborrowsfromGhana. B) Ghanaborrowsfromtherestoftheworld. C) Ghanagovernmenthasabudgetdeficit. D) Ghanagovernmenthasabudgetsurplus. 35) Whichofthefollowingareequaltooneanother? I. aggregateproduction II. aggregateexpenditure III. aggregateincome A) IIequalsIII,butnotI. C) IequalsIIequalsIII.
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36) Ifthegovernmentrunsabudgetdeficit,then A) householdbutnotbusinesssavingmustpayforthedeficit. B) nationalsavingisnegative. C) nationalsavingcannotfundinvestment. D) partofprivatesavingfinancesthedeficit. 37) Afeatureofastockvariableandaflowvariableisthat A) anexampleofastockvariableisrealGDPandanexampleofaflowvariableisconsumption expenditure. B) astockonlymeasuresthevalueofgoodsandservicesproducedinacountryduringagiven timeperiod. C) astockisaquantityperunitoftimeandaflowisaquantitythatexistsatapointintime. D) astockisaquantitythatexistsatapointintimeandaflowisaquantityperunitoftime. 38) Whichofthefollowingisastockvariable? A) Income. B) Saving. 39) Whichofthefollowingisaflowvariable? A) Investment. B) Theamountofmoneyinyoursavingsaccount. C) Capital. D) ThenumberofCDsyouown. 40) WhichofthefollowingisFALSEaboutsaving? A) Savingisaflowvariable. B) Incomeleftafterpayingtaxescaneitherbeconsumedorsaved. C) Savingaddstowealth. D) Savingequalswealthminusconsumptionexpenditures.
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41) Atthebeginningoftheyear,yourwealthis10,000.Duringtheyear,youhaveanincomeof 40,000andyouspend30,000onconsumption.Youpaynotaxes.Yourwealthattheendofthe yearis A) 0. B) 80,000.00. C) 40,000.00. D) 20,000.00. 42) Depreciation A) doesnotchangethelevelofcapitalintheeconomy. B) isastockvariable. C) isthedecreaseinthecapitalstockbecauseofwearandtear. D) BothanswersBandCarecorrect. 43) WhichofthefollowingisnotincludedintheinvestmentcomponentofGDP? A) Abusinessfailstosellallofitsoutputandthereforeexperiencesanincreaseininventories. B) Ahouseholdinvestsinanexpensivedinner. C) Purchaseofnewequipmentbyabusiness. D) Afirmbuildsanewwarehouse. 44) Thetotalamountspentonaddingtothestockofcapitalandonreplacingdepreciatedcapitalis A) capitalconsumption. B) thenetstockofinvestment. C) grossinvestment. D) depreciation. 45) GDPcanbecomputedasthesumof A) thetotalexpendituresofconsumption,investment,andgovernmentexpendituresongoods andservicesoveraperiodoftime. B) thetotalexpendituresofconsumption,investment,governmentexpendituresongoodsand services,andnetexportsoveraperiodoftime. C) thetotalexpendituresofconsumersandbusinessoveraperiodoftime. D) allsalesthathavetakenplaceinaneconomyoveraperiodoftime. 46) LetCrepresentconsumptionexpenditure,S saving,I grossinvestment,G government expendituresongoodsandservices,andNXnetexportsofgoodsandservices.ThenGDPequals A) C+I+G-NX. B) C+ S+ G+ NX. C) C+I+G+NX. D) C+ S+ G- NX. 47) ThelargestcomponentofGDPis A) investment. B) netexportsofgoodsandservices. C) consumptionexpenditures. D) governmentpurchasesofgoodsandservices. 48) Goodsthatareproducedthisyear,storedininventories,andthensoldtoconsumersnextyear A) countinnextyearsGDP. B) arenotcountedasapartofGDP. C) countinboththisyearsandnextyearsGDP. D) countinthisyearsGDP.
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49) Allofthefollowingareincludedingrossinvestmentexpenditure EXCEPT a A) businessspurchaseofanothercompanysstock. B) aretailstorespurchaseofshoestoaddtoitsinventory. C) businessspurchaseofafleetofcars. D) householdspurchaseofanewhouse. 50) Inthenationalaccounts,governmentexpendituresongoodsandservicesexclude A) citygovernmentpurchases. B) transferpayments. C) spendingonnationaldefence. D) citygovernmentpurchasesbutincludenationalgovernmentpurchases.
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51) Theabovetablegivesdataforahypotheticalnation.Grossdomesticproductis A) 4,079billion. B) 4,049billion. C) 4,054billion. D) 4,339billion. 52) Whichofthefollowingrelationshipsiscorrect? A) RealGDP=NominalGDP100 B) NominalGDP=(GDPDeflator RealGDP) 100 C) GDPDeflator=(NominalGDP RealGDP) 100 D) RealGDP=(NominalGDPGDPDeflator) 100 53) TocalculaterealGDP,theGDPdeflatorcanusedtoadjustnominalGDPforchangesin A) thecostofthetypicalworkersmarketbasket. B) theunemploymentrate. C) thegeneralpricelevel. D) nationalincome. 54) Inyearswithinflation,nominalGDPincreases________realGDP. A) atthesamerateas B) slowerthan C) fasterthan D) sometimesfaster,sometimesslower,andsometimesatthesamerateas
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55) Theworking-agepopulationisdefinedasthenumberof A) peopleworkingfull-timejobswhoareovertheageof16. B) peoplelookingforwork. C) peoplebetweentheageof16andretirementwhoarenotinjail,hospital,orotherinstitution. D) peoplewhohaveajob. 56) Theworking-agepopulationcanbedividedintotwogroups, A) peopleintheworkforceandpeoplewhoarenotintheworkforce. B) peoplelookingforworkandthoseinthearmedforces. C) peopleintheworkforceandpeoplelookingforwork. D) peopleintheworkforceandpeoplewithajob. 57) Theworkforceisthesumof A) theworking-agepopulationandthenumberofunemployedpeople. B) thenumberofemployedpeopleandthenumberofunemployedpeople. C) thenumberofemployedpeopleandtheworking-agepopulation. D) thetotalpopulationandthenumberofunemployedpeople. 58) Unemploymentasmeasuredincludesthetotalnumberofpeoplewho A) wouldliketohaveafull-timejobbutareworkingpart-time. B) havejobsorarecurrentlylookingforjobs. C) wouldliketohaveajobbuthavestoppedseekingwork. D) areavailableandlookingforworkbutunabletofindemployment. 59) WhichofthefollowingisNOTconsideredtobeintheworkforce? A) Apersonwhoiswaitingtostartanewjobinthenext30days. B) Astudentwhoworkspart-time. C) Apersonwhoisnotworkingandwhohasnottriedtofindajob. D) Apersonwhoisnotworkingbutwhohastriedtofindajobinthepastweek. 60) Theunemploymentrateiscalculatedas A) [(numberofpeopleunemployed) (working-agepopulation)] 100. B) [(workforce)(numberofpeopleunemployed)] 100. C) [(numberofpeopleunemployed) (workforce)] 100. D) [(workforce)(population)]100.
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Numberofpeople (millions) 246 207 139 133 6 61) D) 4.3percent. 62) C) 64.0percent. D) 56percent.
64) Thedurationofunemploymentisthelengthoftimeaperson A) isunemployedeventhoughthatpersonisnotlookingforwork. B) isunemployedwhilelookingforwork. C) spendsworkinginajob. D) isemployedwhilelookingforwork. 65) Frictionalunemployment A) isunemploymentassociatedwithdecliningindustries. B) isvoluntarypart-timeunemployment. C) isunemploymentassociatedwiththechangingofjobsinachangingeconomy. D) includesdiscouragedworkers. 66) Whenastudentfinishescollegeandbeginslookingforwork, A) cyclicalunemploymentincreases. B) frictionalandcyclicalunemploymentincrease. C) frictionalunemploymentincreases. D) structuralunemploymentincreases. 67) Structuralunemploymentistheresultof A) irresponsibleworkerswithpoorworkhabits. B) aslowdownintherateofeconomicexpansion. C) normallabourmarketturnover. D) technologicalchangeorforeigncompetition. 68) Whentheeconomyswitchesproductiontowardservicesandawayfrommanufacturingand workersinthemanufacturingindustryarepermanentlymaderedundant, A) frictionalandcyclicalunemploymentincrease. B) frictionalunemploymentdecreases. C) cyclicalunemploymentincreases. D) structuralunemploymentincreases. 69) SupposethecountryofTinyTowndecidedtoopenitsborderstofreetrade.Asaresult,anumber ofitsworkerslosttheirjobstointernationalcompetitionandcantfindnewjobsbecausetheir skillsdontmatchwhatisrequiredforjobopenings.Theworkerswholosttheirjobswouldbestbe consideredpartof A) cyclicalunemployment. B) frictionalunemployment. C) structuralunemployment D) discouragedworkers. 70) Cyclicalunemployment A) occurswhentechnologyimprovementschangejobrequirements. B) fluctuatesoverthebusinesscycle. C) isduemainlytojobleavers. D) mayincreaseordecreaseduringanexpansion. 71) Cyclicalunemployment________duringexpansionsand________duringrecessions. A) decreases;decreases B) decreases;increases C) increases;decreases D) increases;increases
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72) Fullemploymentoccurswhen A) cyclicalunemploymentiszero. B) frictionalunemploymentiszero. C) structuralunemploymentiszero. D) cyclicalandfrictionalunemploymentarezero. 73) Thenaturalrateofunemployment A) istheunemploymentratewhentheeconomyisatpotentialGDP. B) isnotafixedpercentageoftheworkforce. C) occurswhenonlythereisnocyclicalunemploymentpresent. D) Alloftheaboveanswersarecorrect. 74) Fullemploymentmeans A) zerounemployment. B) onlyfrictionalandstructuralunemployment. C) onlycyclicalunemployment. D) Noneoftheaboveanswersarecorrect. 75) Priceindexescanoverstateinflationbecausethey A) donotcontainthepricesofforeigngoods. B) donotcontainthecorrectcollectionofgoodspurchasedbyconsumers. C) donotcontainthepricesofservices. D) omitsomequalityimprovements. 76) Aggregatesupplydescribesthebehaviourof A) producers. B) households.
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77) Anaggregatesupplycurvedepictstherelationshipbetween A) thepricelevelandtheaggregatequantitysupplied. B) householdexpendituresandhouseholdincome. C) thepricelevelandnominalGDP. D) thepricelevelandtheaggregatequantitydemanded. 78) Thelong-runaggregatesupply(LAS)curve A) hasapositiveslope. C) ishorizontal.
79) Inthemacroeconomiclongrun, A) regardlessofthepricelevel,theeconomyisproducingatpotentialGDP. B) theeconomyisatfullemployment. C) realGDP=potentialGDP. D) Alloftheaboveanswersarecorrect. 80) Theshort-runaggregatesupplycurve A) isvertical. C) ishorizontal.
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81) Theshort-runaggregatesupplycurve A) illustratesthelevelofpotentialrealGDP. B) isvertical. C) shiftsbecauseofchangesinthepricelevel. D) showstheimpactchangesinthepricelevelhaveonthequantityofrealGDPwhenfactor pricesareconstant. 82) Yourrealwealthismeasuredasthe A) amountofgoodsandservicesyourwealthwillbuy. B) amountofgoodsyouhavedividedbythepricelevel. C) amountofmoneyyouhave. D) amountofassetsyouhaveindollarterms. 83) Onereasonthattheaggregatedemandcurvehasanegativeslopeisbecause A) peoplebuyfewergoodsandsavemorewhenthepricelevelrisesbecausetheirrealwealth decreases. B) peopleearnmoremoneywhenoutputrises. C) firmsproducemorewhenthepricerises. D) Thepremiseofthequestioniswrongbecausetheaggregatedemandcurvehasapositive slope. 84) Accordingtothewealtheffect,anincreaseinthepricelevel________realwealthand________ consumptionexpenditure. A) increases;decreases B) increases;increases C) decreases;increases D) decreases;decreases
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86) IntheKeynesianmodelofaggregateexpenditure,realGDPisdeterminedbythe A) levelofaggregatedemand. B) pricelevel. C) leveloftaxes. D) levelofaggregatesupply. 87) Aconsumptionfunctionshowsa A) positive(direct)relationshipbetweenconsumptionexpenditureanddisposableincome. B) positive(direct)relationshipbetweenconsumptionexpenditureandthepricelevel. C) negative(inverse)relationshipbetweenconsumptionexpenditureandsaving. D) negative(inverse)relationshipbetweenconsumptionexpenditureandthepricelevel. 88) Thegraphoftheconsumptionfunctionhasconsumptionexpenditureontheverticalaxisand A) theinterestrateonthehorizontalaxis. B) thepricelevelonthehorizontalaxis. C) disposableincomeonthehorizontalaxis. D) timeonthehorizontalaxis. 89) Disposableincomeis A) incomeplustransferpaymentsminusconsumptionexpenditure. B) incomeminusnettaxes. C) totalincomedividedbythepricelevel. D) incomeminussaving. 90) Fullemploymentoccurswhenthe A) structuralunemploymentrateequalsthefrictionalunemploymentrate. B) cyclicalunemploymentrateequalsthenaturalrateofunemployment. C) naturalrateofunemploymentequalsthefrictionalunemploymentrate. D) unemploymentrateequalsthenaturalrateofunemployment. 91) WhichofthefollowingvariablesdoesNOT haveadirecteffectofchangingconsumption expenditure? A) Disposableincome. B) Wealth. C) Expectedfutureprofits. D) Expectedfutureincome. 92) Autonomousconsumptionisthatportionofconsumptionexpenditurethatisnotinfluencedby A) thelegalauthorities. B) income. C) prices. D) preferences. 93) Dissavingoccurswhenahousehold A) spendslessthanitreceivesindisposableincome. B) spendsmorethanitsaves. C) consumesmorethanitreceivesindisposableincome. D) savesmorethanitspends. 94) Whendisposableincomeis0,consumptionis2000.Then A) saving=2000. B) saving= 0. C) saving=-2000. D) theMPC= 0.2.
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95) Themarginalpropensitytoconsumeis A) thefractionofachangeindisposableincomethatisconsumed. B) oneminusthefractionoftotaldisposableincomethatissaved. C) thepercentageofagivenincomethatisconsumed. D) thepercentageofinterestincomeconsumed. 96) Themarginalpropensitytoconsume A) exceeds1. C) isnegativeifdissavingispresent.
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97) Ifconsumptionexpendituresforahouseholdincreasefrom1000to1800whendisposable incomerisesfrom1000to2000,themarginalpropensitytoconsumeis A) 0.5. B) 0.2. C) 0.3. D) 0.8. 98) Themarginalpropensitytoconsumemeasureshowmuch A) consumptionexpenditureoccursattheequilibriumincome. B) disposableincomeisconsumed. C) ofachangeindisposableincomewillbeconsumed. D) disposableincomegoestosaving. 99) ThelargertheMPC,the A) morelikelythatthemultiplierwillbeinconsequential. B) largerthevalueofthemultiplier. C) lesslikelythatthemultiplierwillbeaffected. D) smallerthevalueofthemultiplier.
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101) Intheabovefigure,equilibriumexpenditurealongAE2 is A) 1,200billion. B) 600billion. C) 300billion. D) anamountnotgivenintheaboveanswers. Consumptionexpenditure: Investment: Governmentexpenditures: Exports: Imports: C= 8+ 0.7Y I=5 G=7 X=10 M=0.2Y
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102) TheequationsabovedescribetheeconomyofLaLaLand.Whatistheequationfortheaggregate expenditurecurve? B) AE=30+ 0.9Y. C) AE = 13+ 0.5Y. D) AE=30-0.5Y. A) AE=30+0.5Y. 103) TheequationsabovedescribetheeconomyofLaLaLand.Whatistheequilibriumlevelof expenditure? A) 90. B) 29. C) 60. D) 30. 104) TheequationsabovedescribetheeconomyofLaLaLand.Whatistheequilibriumlevelof consumptionexpenditure? A) 60. B) 40. C) 50. D) Noneoftheaboveanswersarecorrect. 105) Whichofthefollowingisapurposeofthegovernmentsbudget? I. Tohelptheeconomyachievefullemployment. II. Tofinancetheactivitiesofthegovernment. III. Topromotesustainedeconomicgrowth. A) IIandIII. B) I,IIandIII. C) IandII.
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106) Fiscalpolicyincludes A) decisionsrelatedtothepurchaseofgovernmentgoodsandservices,thevalueoftransfer payments,andtaxrevenue. B) onlydecisionsrelatedtothevalueoftransferpaymentsandtaxrevenue. C) onlydecisionsrelatedtothepurchaseofgovernmentgoodsandservicesandthevalueof transferpayments. D) onlydecisionsrelatedtothepurchaseofgovernmentgoodsandservices. 107) WhichofthefollowingisNOTasourceofrevenueforGhanagovernment? A) Nationalinsurancecontributions. B) Transferpayments. C) Taxesonincome. D) Noneoftheaboveanswersiscorrectbecausetheyalllistsourcesofrevenue. 108) Abalancedbudgetoccurswhengovernment A) outlaysexceedsrevenue. C) revenueexceedsexpenditures.
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110) Whenthegovernmentsexpendituresexceeditsrevenues,thegovernment A) incursabudgetdeficit. B) needstoborrow. C) debtincreases. D) Alloftheaboveanswersarecorrect. 111) Thedifferencebetweenthegovernmentdebtandthebudgetdeficitis A) thegovernmentdebtshowstheannualdiscrepancybetweengovernmentoutlaysandtax revenueandthebudgetdeficitshowstheaccumulatedbalanceofpastgovernmentdebts. B) thebudgetdeficitshowstheannualdiscrepancybetweengovernmentoutlaysandtax revenueandthegovernmentdebtshowstheaccumulatedbalanceofpastgovernmentdebts. C) notsignificantbecausebothmoveinthesamedirection. D) none. 112) Iftaxrevenueequal1.5billionandgovernmentoutlaysequal 1.6billion,then A) thegovernmentbudgethasadeficitof0.1billion. B) thegovernmentbudgethasasurplusof0.1billion. C) thegovernmentdebtdeclinesby0.1billion. D) thegovernmentdebtisequalto0.1billion. 113) Adiscretionaryfiscalpolicyisafiscalpolicythat A) involvesachangeintaxrates. B) involvesachangeingovernmentdefencespending. C) requiresactionbytheChancelloroftheExchequer. D) istriggeredbythestateoftheeconomy. 114) ThetaxincreasespassedtohelpmovetheeconomymorerapidlytowardpotentialGDParean exampleof A) lump-sumtaxes. B) automaticfiscalpolicy. C) discretionaryfiscalpolicy. D) contractionaryfiscalpolicy. 115) Anexampleofadiscretionaryfiscalpolicyiswhen A) lawsarepassedthatraisetaxes. B) unemploymentpaymentsrisewithunemploymentrates. C) autonomoustaxesareconstant. D) taxrevenuesfallasincomesfall. 116) Theeffectsofachangeingovernmentexpendituresismultipliedthroughoutaneconomy A) onlywhenthereisanincreaseinexpenditures. B) becausetaxesareleftunchanged. C) onlywhenthereisadecreaseinexpenditures. D) becausethesepurchasesgeneratechangesinconsumptionexpenditure. 117) Theterminducedtaxesrefersto A) salestaxesthatwepaybutcouldavoidifwechoosenottopurchasetheitem. B) theriseintaxesthataretheresultofanincreaseinrealGDP. C) thetaxesthatweareforcedtopay. D) localpropertytaxesthatwepayinadditiontotheincometax.
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118) Anautomaticstabilizer A) requiresactionbyParliamentforittotakeeffect. B) involvesachangeintaxrates. C) involvesachangeingovernmentexpenditures. D) istriggeredbythestateoftheeconomy. 119) Becauseofautomaticstabilizers,whenrealGDPdecreases A) governmentexpendituresequaltaxrevenues. B) theeconomyautomaticallygoestofullemployment. C) governmentexpendituresdecreaseandtaxrevenuesincrease. D) governmentexpendituresincreaseandtaxrevenuesdecrease. 120) Anexampleofanexpansionaryfiscalpolicyis A) adecreaseingovernmentexpenditures. B) acutintaxes. C) anincreaseintaxes. D) Noneoftheaboveisanexpansionaryfiscalpolicy. 121) Anexampleofacontractionaryfiscalpolicyis A) acutintaxes. B) anincreaseingovernmentexpenditures. C) anincreaseintaxes. D) Noneoftheaboveisacontractionaryfiscalpolicy. 122) IfthegovernmentwantstoengageinfiscalpolicytoincreaserealGDP,itcould________ governmentexpendituresinorderto________. A) decreaseincreaseaggregatesupply B) decrease;decreaseaggregatedemand C) increase;increaseaggregatesupply D) increase;increaseaggregatedemand 123) AnincreaseingovernmentexpendituresshiftstheAD curve________andanincreaseintaxes shiftstheADcurve________. A) rightward;rightward B) leftward;rightward C) leftward;leftward D) rightward;leftward 124) Thefunctionsofmoneyare A) mediumofexchange,unitofaccount,andstoreofvalue. B) pricing,contracts,andmeansofpayment. C) mediumofexchangeandtheabilitytobuygoodsandservices. D) mediumofexchange,unitofaccount,andmeansofpayment. 125) Incometaxesandtransferpayments A) increasetheeffectsofinvestmentandimports. B) preventtheeconomyfrommovingtowardequilibrium. C) increasethelong-runincomegrowthrate. D) actlikeeconomicshockabsorbersandstabilizefluctuationsinincome.
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126) Anexampleofanautomaticfiscalpolicystabilizeriswhen A) thegovernmentpassesalawthatraisestaxrates. B) taxrevenuesdecreaseasrealGDPdecreases. C) thebudgetdeficitmovesintoasurplusduringarecession. D) thegovernmentdecidestocutgovernmentexpenditures. 127) WhichofthefollowingdoesNOTdescribeafunctionofmoney? A) Ahedgeagainstinflation. B) Aunitofaccount. C) Astoreofvalue. D) Amediumofexchange. 128) Barteris A) theexchangeofgoodsandservicesforanytypeofmoney. B) anothertypeofmoney. C) theexchangeofgoodsandservicesdirectlyforothergoodsandservices. D) printingtoomuchmoney. 129) Themostdirectwayinwhichmoneyeliminatestheneedforadoublecoincidenceofwantsis throughitsuseasa A) mediumofexchange. B) storeofvalue. C) unitofaccount. D) standardofdeferredpayment. 130) Theunitofaccountfunctionoccurswhenmoneyservesas A) ameansofpayment. B) amediumofexchange. C) adoublecoincidenceofwants. D) thewayinwhichpricesarequoted. 131) Whichofthefollowingisanexampleofusingmoneyasastoreofvalue? A) Keeping200onhandforanemergency. B) Payingrentwithachequeonademanddeposit. C) Payingforanewdresswithacreditcard. D) Payingcashforanewautomobile. 132) IntheGhanatoday,moneyconsistsof A) onlydepositsatbanksandotherfinancialinstitutions. B) onlycurrency. C) onlycoins. D) currencyanddepositsatbanksandotherfinancialinstitutions. 133) InGhanaM2+isameasureof A) liquidityandinwhichthemostliquidassetismoney. B) moneyandincludesbothcurrencyandalldeposits. C) moneyandincludessightdepositsbutnottimedeposits. D) moneyandincludesonlycurrency. 134) Chequesare A) money,asarecreditcards. C) notmoney,butcreditcardsare.
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135) Usingacreditcardcanbestbelikenedto A) abarterexchange. B) takingoutaloan. C) usinganyotherformofmoneybecauseyouimmediatelygettotakethegoodshome. D) writingachequeonyourdemanddepositaccount. 136) WhichofthefollowinginstitutionsisNOT afinancialintermediary? A) Aruralbank. B) Acommercialbank. C) ThebankofGhana. D) Noneoftheaboveanswersiscorrectbecausealltheanswerslistedarefinancial intermediaries. 137) Afinancialintermediaryisbestdefinedas A) agovernmentagency,suchastheBankofEngland. B) themostpowerfulbodywithintheBankofEngland. C) asafirmthatacceptsdepositsfromhouseholdsandmakesloanstootherhouseholds. D) asthelenderoflastresort. 138) Themajorroleofacommercialbankisto A) makemortgageloans. B) restrainthegrowthofthequantityofmoney. C) receivedepositsandmakeloans. D) sellsharesandusetheproceedstobuystocks. 139) Whichofthefollowingbalancesheetitemsisaliabilityofacommercialbank? A) Thepublicsdepositswiththebank. B) ThebanksholdingsofGhanagovernmentbonds. C) ThebanksholdingsofBraziliangovernmentbonds. D) ReservesofthebankattheBankofGhana. 140) Foracommercialbank,thetermreservesrefersto A) abankersconcern(reservation)inmakingloanstoanindividualwithoutajob. B) thecashinitsvaultsanddepositsattheBankofGhana. C) theprofitthatthebankretainsattheendoftheyear. D) thenetinterestthatitearnsonloans. 141) Ofthefollowing,theriskiestassetsheldbycommercialbanksare A) reserves. B) GhanagovernmentTreasurybills. C) loansmadetobusinessfirms. D) Ghanagovernmentbonds. 142) Liquidityisthe A) easewithwhichanassetcanbeconvertedintoameansofpaymentwithlittlelossofvalue. B) degreetowhichanassetactsasmoneywithoutalossofvalue. C) easewithwhichcreditcardsareacceptedasameansofpayment. D) degreetowhichmoneycanbeconvertedintoanassetwithlittlelossofvalue. 143) Financialintermediariescreateliquiditywhenthey A) buyassetsthatareliquid. C) haveliabilitiesthatareilliquid.
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144) Poolingofriskoccurswhenfinancialintermediaries A) lendtoavarietyofdifferentborrowers. B) specializeinloaningonlytogoodborrowers. C) bringlenderstogether. D) makeassetsmoreliquid. 145) ThebankingsysteminGhanacreatesmoneythroughthecombinationofexcessreservesand A) stringentBankofGhanaregulations. B) banksloaningexcessreserves. C) banksassetsbeingmorethantheirliabilities. D) commoditymoney. 146) Youmakeadepositof2,000incurrencyatyourbank.Yourbankhasadesiredreserveratioof25 percent.Asaresultofyourdeposit,yourbankwillbeabletoloan A) 500. B) 2,000. C) 1,500. D) Noneoftheaboveanswersiscorrect. 147) Theformulaforthedepositmultiplieris A) 1/(desiredreserveratio). C) 1/(1-actualreserves).
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148) Thelargerthedesiredreserveratio,the A) loweristheinterestratethatbankschargeborrowers. B) smalleristhedepositmultiplier. C) largeristheratioofloanstodeposits. D) higheristheinterestratesthatbankspaydepositors. 149) Adesiredreserveratioof5percentyieldsadepositmultiplierof A) 5.0. B) 10. C) 1.25.
150) Thequantityofmoneythatpeoplechoosetoholddependsonwhichofthefollowing? I. Thepricelevel. II. Financialinnovation. III. Theexchangerate. A) IandII. B) I. C) I,II,andIII. D) IandIII. 151) Thenominaldemandformoneyis A) measuredinconstantpounds. C) inverselyrelatedtoGDP.
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153) Theopportunitycostofholdingmoneyisthe A) easewithwhichanassetcanbecomemoney. B) priceofgoodsandservices. C) interestrate. D) levelofwageandrentalincome. 154) Theopportunitycostofholdingmoneyincreaseswhen A) thepriceofgoodsandservicesfalls. B) theinterestraterises. C) consumersincomesincrease. D) thepurchasingpowerofmoneyrises. 155) Whentheinterestraterises,thequantityofmoneydemandeddecreasesbecause A) thepricelevelalsorisesandpeopledecreasetheirdemandformoney. B) peoplewillbuyfewergoodsandholdlessmoney. C) peopleshiftfundsfrommoneyholdingstointerest-bearingassets. D) peoplemovefundsfrominterest-bearingassetsintomoney. 156) ________inrealGDPincreasethedemandformoneyand________intheinterestratedecrease thequantityofmoneydemanded. A) Decreases;increases B) Increases;increases C) Increases;decreases D) Decreases;decreases 157) Thedemandformoneycurve A) hasanegativeslope. C) hasapositiveslope. 158) Thesupplyofmoneycurve A) ishorizontal. C) hasapositiveslope.
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159) Bondpricesandinterestratesare A) unrelated. B) independentofanyactionbytheBankofEngland. C) inverselyrelated. D) positivelyrelated. 160) Ifbondpricesfall, A) interestratesrise. C) householdsincreasecashholdings.
161) Supposethattheinterestrateisgreaterthantheequilibriuminterestrate.Whichofthefollowing occurs? I. Thereisanexcessquantityofmoney. II. Thequantityofmoneyautomaticallyincreases. III. Peoplestartbuyingbonds. A) I. B) IandII. C) IandIII. D) I,IIandIII.
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162) TheBankofGhana A) regulatesthenationsfinancialinstitutions. B) conductsthenationsmonetarypolicy. C) BothanswersAandBarecorrect. D) NeitheranswerAnorBiscorrect. 163) WhichofthefollowingisNOTafunctionofacentralbank? A) Regulatingbanks. B) Operatingasabankforthegovernment. C) Operatingasaborroweroffirstresort. D) Operatingasabankforcommercialbanks. 164) Controllingthequantityofmoneyandinterestratestoinfluenceaggregateeconomicactivityis called A) fiscalpolicy. B) bankpolicy. C) monetarypolicy. D) foreignpolicy. 165) Themonetarybase(high-poweredmoney)isthesumof A) banksreservesattheBankofGhanaandrepoloanstobanks. B) governmentdepositsattheBankofGhana,notesheldbythepublic,coins,andbanks reservesattheBankofEngland. C) Treasurybillsandothergovernmentsecurities. D) notesheldbythepublic,coins,andbanksreservesattheBankofGhana. 166) WhichofthefollowingisatoolthatisusedbytheBankof Ghana tocontrolthesupplyofmoney? A) Excessreserves. B) Governmentexpendituremultiplier. C) Realinterestrates. D) Openmarketoperations. 167) TheBankofGhanaspurchaseorsaleofGhana governmentsecuritiesis A) donelessfrequentlythananyoftheBankofGhanasothermonetarypolicytools. B) anexampleoftheBankofGhanausingitsreporate. C) calledanopenmarketoperation. D) anexampleoftheBankofGhanaactingasalenderoflastresort. 168) Themoneymultiplierdetermineshowmuch A) themonetarybasewillexpandgivenachangeinthequantityofmoney. B) thequantityofmoneywillexpandgivenachangeinthemonetarybase. C) moneydemandwillexpandgivenachangeinthequantityofmoney. D) realGDPwillexpandgivenanincreaseinautonomousinvestment. 169) Whentherealinterestratefalls, A) netexportsdecrease. C) consumptionexpendituresdecrease.
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171) TheBankofEnglandsactionstofightinflationshiftthe A) long-runaggregatesupplycurverightward. B) long-runaggregatesupplycurveleftward. C) aggregatedemandcurveleftward. D) aggregatedemandcurverightward. 172) Thesupplyofanddemandformoneydeterminetheequilibrium A) interestrate. B) pricelevel. C) realwagerate. D) levelofrealGDP. 173) Anexpansionaryfiscalpolicy________theinterestrate. A) lowers B) raises C) doesnotchange D) Noneoftheaboveanswersiscorrectbecausetheeffectontheinterestratedependson whethertheexpansionaryfiscalpolicywasanincreaseingovernmentexpendituresoracut intaxes. 174) AtaxcutincreasesrealGDP.TheincreaseinrealGDP________thedemandformoney. A) increases B) decreases C) doesnotchange D) probablychangesbutmoreinformationisneededtodetermineifitincreasesordecreases 175) Theideathatanexpansionaryfiscalpolicydecreasesinvestmentiscalledthe A) capitalinvestmenteffect. B) crowding-outeffect. C) government-investmenteffect. D) offseteffect. 176) Fiscalpolicyismosteffectiveif A) achangeintheinterestratehasalargeeffectonthequantityofmoneydemanded. B) achangeintheinterestratehasasmalleffectonthequantityofmoneydemanded. C) achangeintheinterestratehasnoeffectonthequantityofmoneydemanded. D) thereisalotofcrowdingout. 177) Monetarypolicyismosteffectivewhen A) agivenchangeinthemoneysupplyhasalargeeffectontheinterestrate. B) agivenchangeinthemoneysupplyhasalargeeffectoninflation. C) theinterestratedoesnotinfluenceaggregateexpenditures. D) agivenchangeinthemoneysupplyhasnoeffectontheinterestrate. 178) Thegoodsandservicesthatacountrybuysfromothercountriesarecalledits A) imports. B) exports. C) tariffs. 179) Netexportsis A) thevolumeofexportsminusthevolumeofimports. B) thevolumeoftrademinusthevalueoftrade. C) totalUKtrademinusthetotaltradeoftherestoftheworld. D) thevalueofexportsminusthevalueofimports.
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180) Acountryhasacomparativeadvantageinproducingagoodifincomparisontoanyother country,itcanproducethatgood A) withasmallerweightedaverageofinputs. B) withlesslabour. C) ataloweropportunitycost. D) atloweraveragecost. 181) Whentradebetweentwocountriesoccurs,theresultisthat A) bothcountriesgainbecausetheyeachproducemorethanbefore. B) onecountrygainsbecauseitcanconsumemorethanbeforeandtheothercountryloses. C) bothcountrieslosebecausetheincreaseindemandforeachcountrysoutputcausespricesto rise. D) bothcountriesgainbecausebothcanconsumemorethanbefore. 182) Atariffisa A) subsidyonanexportedgood. C) subsidyonanimportedgood. 183) Amajorpurposeoftariffsisto A) discourageimports. C) encourageexports.
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184) Anyactionotherthanatariffthatrestrictsinternationaltradeiscalleda A) subsidy. B) non-tariffbarrier. C) quota. D) surcharge. 185) Anon-tariffbarrieris A) alicensefeethatmustbepaidtogetanexportlicenseintheUnitedKingdom. B) anamountofmoneypaidfortheprivilegeofsellingagoodexportedfromthecountry. C) anyactionotherthanatariffthatlimitstheimportsofgoodsandservices. D) anyactionotherthanatariffthatlimitstheproductionofgoodsandservices. 186) Toolsusedtoprotectdomesticindustriesfromforeigncompetitionincludewhichofthe following? I. tariffs. II. membershipintheWTO. III. participationinGATT. A) I. B) IandII. C) IIandIII. D) I,II,andIII. 187) UKtradebarriersonbeef A) reduceUKbeefpricesanddecreaseUKjobsraisingcattle. B) raiseUKbeefpricesanddecreaseUKjobsraisingcattle. C) reduceUKbeefpricesandincreaseUKjobsraisingcattle. D) raiseUKbeefpricesandincreaseUKjobsraisingcattle. 188) Tariffs A) encourageproducerstoproduceless. B) earnrevenueforconsumers. C) encourageconsumerstobuymoreimports. D) earnrevenueforthegovernment.
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189) Quotas A) arenotusedbytheUnitedKingdom. B) arethesameastariffs. C) settheminimumpercentageofthevalueofaproductthatmustconsistofimported components. D) setthenumberofunitsofagoodthatcanbeimported. 190) Aquotadirectlyrestricts________andsoitprotectsdomestic________. A) exports;producers B) imports;producers C) imports;consumers D) exports;consumers 191) AllofthefollowingareargumentsforprotectionfrominternationalfreetradeEXCEPT A) protectionstrengthenstheefficiencygainsfromacomparativeadvantage. B) protectionpenalizeslaxenvironmentalstandards. C) protectionpromotesdiversityandstability. D) protectionpreservesdomesticculture. 192) Themostefficientwaytoencouragethegrowthofaninfant-industryisthrougha A) tariff. B) quota. C) voluntaryexportrestraint. D) subsidy. 193) Thebalanceofpaymentsaccountusedtorecordpaymentsforimportedgoodsandservicesisthe A) currentaccount. B) capitalaccount. C) importaccount. D) eximaccount. 194) TheUKcapitalaccountmeasures A) receiptsfromgoodsandservicessoldandtransferstoandfromforeigners. B) nettransferpaymentsbetweenUKresidentsandforeigners. C) netincreasesanddecreasesintheUKholdingsofforeigncurrency. D) foreigninvestmentintheUnitedKingdomminusUKinvestmentabroad. 195) Acreditornationmeansanationwhose A) lendingtotherestoftheworldexceedsitsborrowingfromtherestoftheworld. B) exportsexceeditsimports. C) currentaccountislargerthanitscapitalaccount. D) totalinvestmentsintherestoftheworldexceedstherestoftheworldsinvestmentsinthat country. 196) Adebtornationmeansanationwhose A) currentaccountislessthanitscapitalaccount. B) importsexceedsitsexports. C) totalinvestmentsintherestoftheworldarelessthantherestoftheworldsinvestmentsin thatcountry. D) lendingtotherestoftheworldexceedsitsborrowingfromtherestoftheworld.
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197) Whichofthefollowingapplytoexchangerates? I. Theexchangerateisaprice. II. Theexchangerateforacurrencydependsonwhichforeignexchangemarketyouuse. III. TheforeignexchangerateisdifferentfromotherpricesbecauseitisNOTdeterminedby supplyanddemand. A) IIandIII. B) I. C) I,II,andIII. D) IandII. 198) Bydefinition,currencydepreciationoccurswhenthevalueof A) thecurrencyrisesrelativetoanothercurrency. B) thecurrencyfallsrelativetoanothercurrency. C) allcurrenciesfallrelativetogold. D) goldfallsrelativetothevalueofcurrencies. 199) Thelawofdemandforcedismeansthatthe A) lowertheexchangerate,thegreaterthequantityofcedisdemanded. B) highertheexchangerate,thesmallerthequantityofcedisdemanded. C) lowertheexchangerate,thesmallerthequantityofGhanaexportsdemanded. D) BothanswersAandBarecorrect. 200) ThegreaterthedemandforGhanaexports,the A) largeristhecurrentaccountdeficit. B) largeristhequantityofGhanapoundsdemanded. C) largeristhedemandfornon-Ghanacurrencies. D) smalleristhequantityofGhanapoundsdemanded.
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