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IMA612S- INTERMEDIATE MACROECONOMICS- 2ND OPP- NOV 2023 |
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nAmlBIA untVERSITY
OF SCIEnCE TECHn OLOGY
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATIONS:
BACHELOR OF ECONOMICS, BACHELOR OF ACCOUNTING GENERAL AND BACHELOR OF
ACCOUNTING (CHARTERED)
QUALIFICATION CODE:
O7BECO, 07BOAC AND 07 BACC
LEVEL: 7
COURSE CODE: IMA612S
SESSION: NOVEMBER 2023
DURATION: 3 HOURS
COURSE NAME: INTERMEDIATE MACROECONIMICS
PAPER: THEORY
MARKS: 100
SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINER(S) Mr Eslon Ngeendepi
MODERATOR: Miss Ndeshi Shitenga
INSTRUCTIONS
1. Answer ALL the questions.
2. Write clearly and neatly.
3. Number the answers clearly.
PERMISSIBLE MATERIALS
1. Pens/pencils/erasers
2. Calculator
3. Ruler
THIS QUESTION PAPER CONSISTS OF 4 PAGES (Including this front page)
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QUESTION 1
[10 Marks]
Table 1: Hypothetical Nominal and GDP deflator for the Namibian Economy
Year
..
2018
. Nominal GOP (N$)
500
GDP deflator
100 (base year)
2019
550
110
2020
610
115
2021
680
123
2022
680
120
a) Given the figures in table 1 above, calculate real GDPfor each year.
(5)
b) Using the GDP deflator values in the table above, determine the inflation rate for each
subsequent year.
(5)
QUESTION 2
[25 Marks]
a) Suppose you are measuring annual GDPof a country by adding up the final value of all
goods and services produced in the economy. Determine the effect on the country's
GDP for each of the following transactions.
i. A seafood restaurant buys N$100 worth of fish from a fisherman.
(2)
ii. A family spends N$100 on a dinner at a restaurant.
(2)
iii. South African Airways buys a C919 jet, manufactured in China, for ¥58 billion
(R9.5 billion) instead of a Boeing or an Airbus.
(2)
iv. The national airline of your country buys a new jet from Boeing for N$200
million.
(2)
v. A European airline sells one of its Airbus to a private company for €100 million.
(2)
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b) During a given year, suppose the following activities occur in an economy.
An automobile manufacturing company pays its workers N$10 mi/lion to assemble 5,000
cars. The cars are then sold to an automobile store for N$12 million.
That year, the store pays N$1 million in wages to its salespeople, who sell the cars
directly to consumers for N$15 million.
a) Using the production-of-final-goods approach, what is GDP in this economy?
(6)
b) What is the value added at each stage of production? Using the value-added approach,
what is GDP?
(4)
c) What are the costs incurred in terms of wage payment and the profits earned? Using
the income approach, what is GDP?
(5)
QUESTION 3
[25 Marks]
a) Suppose that the Namibian economy is characterised by the following behavioural
equations:
C= 160 + 0.6Vct
I= 150
G= 150
T= 100
Solve for:
i.
Equilibrium for the equilibrium level of income for Namibia.
(8)
ii.
Disposable income.
(4)
iii.
Consumption spending.
(4)
iv.
When investment spending is changed by a certain amount, the resulting
change in income becomes?
(4)
v.
Calculate and explain the average propensity to consume and the average
propensity to save.
(5)
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QUESTION 4
[40 Marks]
{a) Critically comment on the difference between the Permanent Income
Hypothesis, Relative Income Hypothesis and the Life Cycle Hypothesis. {30)
{b) The projected cash flow stream for a project proposal is given as follows: {The
interest rate 5% and present cost is N$309629-00.
YEAR
1
2
3
4
5
6
7
CASH INFLOWS (N$)
60000
70000
80000
50000
40000
30000
10000
Determine the acceptability of this project proposal using the Present value technique.
{10)
TOTAL = 100 MARKS
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