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BSP2001 - Macro and International Economics Sem 1 2013/2014

Topic 1

Practice Multiple Choice Questions

1) Macroeconomics does NOT focus on _______.
A) policies that affect consumption and saving.
B) the pricing decision of individual firms.
C) the determination of unemployment and inflation.
D) the determination of output and economic growth.


2) Given a demand function where Quantity =50 +0.5Income - 0.2Price. Ceteris
paribus, what is the change in quantity as a result of a $1 change in price?
A) 50.2 when Income =0
B) 49.8 when Income =0
C) +0.2
D) -0.2


3) Given that Productivity =Output / Labor. If the growth rate of productivity is 2% and
growth rate of output is 5%, what is the growth rate of labor?
A) 0.4%
B) 2.5%
C) 3%
D) 7%


4) When GDP rises, the economy is said to be in _______.
A) an expansion.
B) a contraction.
C) a depression.
D) a recession.


5) The circular flow of income describes the _______.
A) amount of money in the economy.
B) sum of all income in the economy.
C) sum of all expenditures in the economy.
D) flow of income from domestic firms to the nonproduction sector and back again.





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6) GDP can be measured by the _______.
A) total value of all sales in the economy.
B) total value of final goods and services currently produced in the economy.
C) total value of all intermediate goods produced in the economy.
D) total number of sale transactions in the economy.


7) A change in nominal GDP can be due to a change in _______.
A) prices.
B) physical production.
C) hours of production.
D) (A) and (B).


8) Which of the following helps economists avoid double counting in computing GDP?
A) Include goods and services produced only within a specified area.
B) Include the sale of used-goods at their market prices.
C) Avoid the use of intermediate goods in calculating GDP.
D) Include only capital purchases by corporations and not by family-owned firms.


9) A country is said to be experiencing inflation when _______.
A) prices of most goods and services are rising over time.
B) prices of most goods and services are falling over time.
C) total output is rising over time.
D) total output is falling over time.


10) A country has a trade surplus when _______.
A) imports exceed exports.
B) imports equal exports.
C) exports exceed imports.
D) imports equal zero.













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Solution:

1) B
2) D
3) C
4) A
5) D
6) B
7) D
8) C
9) A
10) C