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IMA612S - INTERMEDIATE MACROECONOMICS - 2ND OPP - JAN 2020 |
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FACULTY OF
NAMIBIA UNIVERSITY
OF SCIENCE AND TECHNOLOGY
SCIENCES
MANAGEMENT
DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE
QUALIFICATION: BACHELOR OF ECONOMICS
QUALIFICATION CODE: 07BECO
LEVEL: 7
COURSE CODE: IMA612S
COURSE NAME: INTERMEDIATE MACROECONOMICS
SESSION: JANUARY 2020
DURATION: 3 HOURS
PAPER: THEORY
MARKS: 100
SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINER(S) | MS.NNSHITENGA Mr. P. NANGULA MS. K. MACKENZIE
MS. L. HOFNI
INSTRUCTIONS
This paper consist of section A and B
Answer ALL questions.
Number your answers in accordance with the question paper.
Start each section Answer on a new page
Write clearly and legibly
PERMISSIBLE MATERIALS
1. Pen
2. Ruler
3. Calculator
THIS QUESTION PAPER CONSISTS OF _6_ PAGES (Including this front page)
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SECTION A: MULTIPLE CHOICE QUESTIONS
SECTION A:
MULTIPLE CHOICE QUESTIONS
1. Inflation:
a) Always reduces the cost of living
b) Always reduces the standard of living
c) Reduces the price of products
d) Reduces the purchasing power of a pound
[20 Marks]
An increase in injections into the economy may lead to:
a) An outward shift of aggregate demand and demand-pull inflation
b) An outward shift of aggregate demand and cost-push inflation
c) An outward shift of aggregate supply and demand-pull inflation
d) An outward shift of aggregate supply and cost-push inflation
An increase in the marginal propensity to consume will:
a) Lead to the consumption function becoming steeper
b) Shift the consumption function upwards
c) Shift the consumption function downwards
d) Shift the savings function upwards
If the Keynesian consumption function is C = 10 + 0.8 Yd then, if disposable income
is £1000, what is amount of total consumption?
a) £0.8
b) £800
c) £810
d) £0.81
An increase in consumption at any given level of income is likely to lead to:
a) Higher aggregate demand
b) An increase in exports
c) A fall in taxation revenue
d) Adecrease in import spending
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6. Lower interest rates are likely to:
a) Decrease consumption
b) Increase cost of borrowing
c) Encourage saving
d) Increase borrowing and spending
7. The effects of inflation on the price competitiveness of a country's products may
be offset by:
a) An appreciation of the currency
b) A revaluation of the currency
c) Adepreciation of the currency
d) Lower inflation abroad
Please read the following scenario and answer questions 8 to 10 below,
Scenario: Real GDP: Suppose that in year 1, an economy produces 100 golf balls
that sell for $3 each and 75 pizzas that sell for $8 each. The next year the economy
produces 110 golf balls that sell for $3.25 each and 80 pizzas that sell for $9 each.
8. (Scenario: Real GDP )The growth rate of nominal GDP from year 1 to year 2 is:
A. 19.72%.
B. 10%.
C. 7.8%.
D. 8.8%.
9. (Scenario: Real GDP )Using year 1 as the base year, real GDP in year 2 is:
A. N$900.
B. N$970.
C. N$1,000.
D.
N$1,077.50
10. (Scenario: Real GDP )The value of nominal GDP in years 1 and 2 respectively is:
A.
N$180,000; N$257,400.
B.
N$900; N$990.
C.
N$900; N$1,077.50.
D.
N$1,000; N$1,005.
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SECTION B
[80 MARKS]
QUESTION 1
[14 MARKS]
Given the information in the following tables, fill the blanks (assuming that the
consumption function is linear with respect to disposable income). Find the tax
function, consumption function with respect to disposable income, the consumption
function with respect to output, the savings function with respect to disposable income,
and the savings function with respect to output, please note that Progressive Taxes:
Y
T
Y-T
Cc
Ss
0
-20
110
100
0
200
80
Taxes are a function of income (i.e. T = c + dY)
a) Fill the gap in the table above
b) Consumption Function with respect to Y
c) Savings Function w/ respect to Y
d) What is the level of Output for this economy
QUESTION 2
150
390
(0.5 *16 = 8 Marks)
(2 Marks)
(2 Marks)
(2 Marks)
[44 MARKS]
Consider the economy with the following information about goods and money
market:
Cd = 200 + 0.5Y — 500r
Id = 200 - 500r
(M/P)d= 0.5Y — 250r
G = 150
M = 4900
Y = 1000
a) What are the general equilibrium levels of the real interest rate r, the price level
P, desired aggregate consumption Cd, and desired investment Id? ( keep the
answers to 2 decimal places) (20 Marks)
b) Suppose that the majority of economic activity in this economy is bread making.
Because wheat plantations received good rain this year, let us imagine that the
weather this year is unusually conducive to growing wheat. In the IS-LM
framework, this situation represents a beneficial supply shock. Specifically,
suppose the full-employment level of output Y1 increases temporarily to Y2 =
1050. Show what happens to the economy in a graph. What will be the new
short-run equilibrium value of r and how will the new general equilibrium come
i]es se so
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about? What is the new price level P? ( keep the answers to 2 decimal
places) (24Marks )
QUESTION 3
iEofdceonintnfiolfmuieianbctliealgrboyewctsohunsotcmaaiinsntebdehadrvieesfeindeinedvreealaslopaenndatiionmncoardleealsisenciionnmeaan
country’s productive capacity,
over a period of years, Most
attempt explain the concept
of economic growth;
a) Discuss in details
the main
factors
influencing
the economic
growth
of a country
b)
(12 Marks)
Outline the
major
three
benefits
and
three
costs
that
result
from
economic
growth?
(6 Marks)
MARKS:100
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Student NUMbEr:. cee e. ce c. ee ee. e ee. e ce. nce.eee.te. ens . eee . eeee. eetees
ANSWER SHEET FOR SECTION A
Mark the correct answer with an X.
A
B
10
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