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Macro Economics-Sheeba Tahir. B.com 3 (A) - 4 (A) - Ev. Hyderi.. Paper A.

This document outlines an online final examination for a macroeconomics course. It includes instructions, a 10 question multiple choice section worth 5 marks, a 5 question true/false section worth 5 marks, and 6 long answer questions worth a total of 30 marks. The exam covers topics such as fiscal and monetary policy, inflation, Phillips Curve, real business cycles, deflation, and economic fluctuations. Students are instructed to show all work and calculations, and are not allowed to overwrite answers.

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Abdul Sammad
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59 views4 pages

Macro Economics-Sheeba Tahir. B.com 3 (A) - 4 (A) - Ev. Hyderi.. Paper A.

This document outlines an online final examination for a macroeconomics course. It includes instructions, a 10 question multiple choice section worth 5 marks, a 5 question true/false section worth 5 marks, and 6 long answer questions worth a total of 30 marks. The exam covers topics such as fiscal and monetary policy, inflation, Phillips Curve, real business cycles, deflation, and economic fluctuations. Students are instructed to show all work and calculations, and are not allowed to overwrite answers.

Uploaded by

Abdul Sammad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Online Final Examination Fall 2020 (Hyderi)

Student ID: 15387 Date: 11/Jan/2021

Course Title: Macroeconomics Course Code: ECO 281

Program: B. Com Teacher: Sheeba Tahir

3
Semester: B. Com 3 (A) / 4 (A) - Evening Marks: 40

Instructions:
• Read all the questions carefully.
• All the questions are compulsory.
• Show all necessary calculations.
• Make Graphs where necessary
• Over writing is not allowed.
ATTEMPT ALL THE QUESTIONS IN THE ANSWER SHEET

PART I(a): Choose the most appropriate answer for the following: (05 marks)

1. Stagflation is
(a) Inflation with recession
(b) Inflation with growth
(c) Deflation with growth
(d) high inflation, high unemployment and stagnant growth
2. Average propensity to save:
(a) 1-MPC
(b) 1-APC
(c) 1-APC
(d) None of the above
3. The marginal propensity to save is:
(a) Increasing if the marginal propensity to save is increasing.
(b) The proportion of total disposable income that the average family save.
(c) The change in consumer spending divided by the change in aggregate
disposable income.
(d) The change in consumer spending minus the change in aggregate disposable
income.

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4. When using AD/AS analysis to illustrate changes within an economy, which of the
following would NOT need to be considered when looking at changes to economic
growth?
(a) Increased labor productivity
(b) More efficient use of the capital stock
(c) Increased availability of social capital
(d) Developing a more efficient capital and finance sector
5. If people are made unemployed because of a transition from one job to another
job, this is known as:
(a) Frictional Unemployment
(b) Seasonal Unemployment
(c) Cyclical Unemployment
(d) Structural Unemployment
6. Which of the following might have caused the shift in aggregate supply shown in the
diagram below? Tick all the answers that apply.

(a) An improvement in technology


(b) A depreciation of the exchange rate
(c) An increase in costs
(d) A reduction in government expenditure
(e) A cut in income tax
(f) An increase in wage levels
7. Which of the following would cause a shift in AS?
(a) a reduction in income tax
(b) a reduction in interest rates
(c) an increase in government spending
(d) a fall in the cost of production

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8. All of the following would tend to raise the exchange rate (appreciate) for a country’s
currency except one. Which ONE is the EXCEPTION?
(a) A fall in the volume of imports
(b) A risen in foreign investment in the country
(c) A fall in domestic interest rates
(d) A rise in the country’s invisible earnings
9. Find multiplier when MPC= 0.75
(a) 4
(b) 0.75
(c) 0.8
(d) 0.333

10. Contractionary monetary policy is:


(a) increase in interest rate, decrease in MS
(b) decrease in interest rate, increase in MS
(c) increase in tax rate and government expenditure
(d) none of the above

PART I(b): True and false statements. (Justify your Statement with reason) (05 marks)

i. Expansionary monetary policy refers to increase in taxation and decrease in


spending policies implemented by the government.

ii. Purchasing power parity is the relationship between two countries' interest rates and
their foreign exchange rates.
iii. Keynes introduced the concept of ‘marginal efficiency of capital’ (MEC) to explain the
expected rate of return on investment.
iv. An increase in the taxation level leads to an increase in the Aggregate demand.

PART II: Attempt all the questions. This section carries 30 marks.

Q1 (a)Discuss the effectiveness of two fiscal policy options available to a country

experiencing a recession. (03 marks)

Q1 (b) Distinguish between monetary and fiscal policy. (03 marks)

Q2 (a) Define Inflation. What are the types of inflation? (02 marks)

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Q2 (b) Explain Philip's Curve. Plot Philip’s Curve by using the following table. (03 marks)

Years 1974 1975 1976 1978 1979

Unemployment 5.6 8.5 7.7 7.1 6.1


Rate
Inflation Rate 11.0 9.1 5.8 6.5 7.6

Q3.Explain real business cycle theory. (02 marks)

Q4 (a)Explain why governments may view deflation as a threat. (03 marks)

Q4 (b)Describe the phenomenon of economic fluctuations and articulate Keynes’s opinion

of the causes that led to the Great Depression. (05 marks)

Q5.Explain how output and the price level are determined in the long run. (04 marks)

Q6.Consider an economy described by the following equations: (05 marks)

Y=C+I+G+NX
MS=MD
where,
G=1, 500 Tax=200 NX=240
C = 250 + 0.85(Y − T) I = 1,200 − 50 r.
MS=1, 500
MD= 4Y-1100r
a. In this economy, Find the equilibrium interest rate.
b. Now suppose that G rises to 1,250. Find the new equilibrium interest rate.

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