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Revision ECO211 UITM____________________
1. Chapter 1: Introducfion to Macroeconomics
PartA:Multiple
Choices
Questions
6. Which of the following topics are more likely to be studied in macroeconomics
A. The price of beef, wage differences between genders and antitrUst laws.
B. How CUsfomers maximize utility and how prices are established in markets for
agricultural products.
C. The effect of taxes on the process of airline tickets, the profitability of
automobile-manufacturing firms and employment trends in the food-service
industry.
D. The percentage of the labor force that is out work and differences in average
income from country to country.
. These are all conventional
m a c r o e c o n o m i c s objectives except
A. to achieve price stabiity.
B. to maximize employment generation.
C. to achieve economy growth
D. to achieve equilibrium in foreign sector.
2. Macroeconomics is concerned with the study of
A. the effect of a reduction in income fax rates on the nation's total output.
B. how consumers in kuala lumpur respond fo an increase in flour prices.
C. the effect of an increase income tax on a typical household's purchase of
goods.
D. the effect of changing wages on the market for agriculture products.
7. Macroeconomics is a branch of economics that
A. studies the effects and consequences of the aggregate behavior of all
decision - making units in the economy
B. is concerned only with the determination of individual market prices.
C. studies the pricing strategy of companies.
D. studies only inflation.
3. Which of the following statements best defines macroeconomics?
A. Macroeconomics is the study of how individual prices are determined.
B. Macroeconomics is the study of how governments maximize their revenues.
C. Macroeconomics is the study of the consumption patterns of low-income
households.
8. Objectives of Islamic macroeconomics include all of the following except
A. to achieve economic justice and freedom.
B. to praduce many business firms.
C. to maximize employmenf generation.
D. Macroeconomics is the study of the entire economy. D. to achieve universal educafion.
4. Macroeconomics is
9. What is the meaning of "equilibrium" in macroeconomics
A.
he study of study how households and firm make decisions and how
ine
inferact.
B. the study of money and financial markets.
C. the study of
economy- wide phenomend.
D. the study of market regulations.
A. Aggregate demand is equal to aggregate supply.
B. Total value of output produced is more than total value of expenditure.
C. Aggregate supply is more than aggregate demand.
D. Aggregate demand is more than aggregate supply.
5. Social justice in distribution of income and wealth is refers fto
10. Macroeconomics is concerned about all except one of the following
A. the general economic factors that determine income.
B. the production decisions involving consumer goods in a market.
C. saving and investment from the standpoint of the whole economy.
D. the general price level.
A. the principle of brotherhood in Islam.
encompases social, political, economic and justice between
being, individuals, institutions and nations.
humdn
decisIon faken is to make the approval of allah and to achieve
D. all of the above.
lah".
5
4
2. Chapter 2:
Measuring NationalIncom
6. Gross Domestic Product (GP) measures
A. the market value of intermediafe products produced durina the
B. the market value of final products produced in the nation driear
C. the sum of the markef value oft final products produces and i
the year.
D. the sum
of the market value of both final and intermei
produced during the year.
11.Injection into an
economywillcause
A. an increase in
unemployment.
B. a decrease in inflation.
C. an increase in national income.
D. an increase in import.
uring
ducts
12. The total value of income earned by Malaysian is equal to
7. National income of a cOunfry can be caicuiated USing the
following aporooch
except iches A. personal disposable income.
B. gross domestic product at market price.
C. gross national product at factor cost.
D. gros domestic product at factor cost.
A. income approach.
B. expenditure approach.
C. product approach.
D. leakage approach.
13. Gross domestic productf (GDP) does not include
i. intermediate goods as well as final goods
second- hand goods sold in the cuent time period
foreign produced goods
8. Personal income is:
.
A. the amount households have for consumption, savings and payment of
personal taxes.
B. national income minus corporate profits and EPF plus transfer paymenfs.
C. total income received by household before taxes.
D. all of above.
A. (i) only.
B. (lü) and (i) only.
C. (i) and (ii) only.
D. (). (i) and (ii).
14. Which of the following serves as an example of the underground or "shadow"
economy?
9. Which of the following is a true statement concerning transfer paymenis
A. Transfer payments are included in the import category of GDP.
B.
Ufimately, transfer payments must be repaid to the goverrnmeni
recipients.
A. A man sells illegal drugs and fails to report his income.
B. A woman barters home repairs with her neighbor.
C. A teenager baby-sits regularly and fails to report her income.
D. All of the above are correct.
the
no
rdnsrer payments are
payments made by the government for
wi
good or service is CuTently received in return.
15. Which of the following is not a payment made to household in exchange for
goods and services?
D.
ranster payments are included in the next exports category o
O
10.In the circular flow of income model, components of
injecrio
Component of leakage are
while
re
A. Taxes
B. Rent
C. Wages
D. Profit
A.
investment, government expenditure and export; saving, Tax nd export
B. Saving. faxes and imports; investment, government expenalO
C.government expenditure, taxes and import; savings,invesi and impo
D.
savings,investment and exports: government expendifure,
11
1 0
3. Chapter 3: Determinafion of National Income Equilibrium
Chapter 3: Determination of National Income Equilibrium
6. The following boundaries of investment in Islam except for
A. investment emphasizing welfare
B. interest based investment
12.The consumption function is given as C =
280 0.8Yd. if income is RM2,000
and net taxes are RM200, consumption equals
C. investment based on al-maslahah
A. RMI 820
B. RM1 800
C. RMI 720
D. investment based on syariah principles
7. Investment demand curve will shift to the least as the result of D. RM1 700
A. a decrease in business taxes.
13. Which of the following are components of aggregate expenditures?
B. an advancement of technology.
C. business pessimism about the future economic condition.
D. a decrease in the interest rate.
A. Household consumption, business investment, government transfer
paymernf and net exports.
B. Household consumption, business investment, govemment spending for
goods and services and saving.
C. Household consumption, business investment, government spending for
goods and services and exports.
D. Household consumption, business investment. government spending for
goods and services and net exports.
8. At the breakeven point in the analysis of national income equilibrium,
A. income is less than consumption.
B. income equal consumption.
C. saving is negative.
D. saving is posifive.
14. If the autonomoUs Consumption increases, the size of the multiplier would
9. The multiplier effect means that A. increase.
B. decrease.
C. either increase or decrease depending on the size of the change in
autonomous consumption.
D. remain constant.
A. a small decline in the MPC can cause equilibrium national income to rise
by several times that amount.
B. a small increase in investment can cause national income to change by a
larger amount.
C. consumption is typically several times as large as saving.
D. a small change in consumption demand can lead to a much larger
increase in investment.
15. The average propensity to save is calculated by dividing
A. saving by income.
B. total income bysaving.
C. change in income by change in saving.
D. change in saving by income.
10. Given that the saving function in a two sector economy is S =
- 100 + 0.2Yd,
then the value of multiplier in this economy is
A. 1.25
2.50
16. Which of the following is a leakage?
B.
A. Imports of machineries.
B. Rental expenditure by a company.
C. Expenditure bya government entify.
D. Investment outside the country.
C. 4.00
D. 5.00
11. How much is the marginal propensity to consume if the investment multipller
2.5?
A. 0.2.
B. 0.6.
C. 0.4.
D. 1.0 43
42
4. Chapter4: Money, Barnking and Financial Institutions
6. Which ofthe following is notpart of money supply M1
A. Negotiable bills
B. Coins.
C. Curent deposit at commercial banks
D. Traveler's checks.
7. The main job of bank Negara Malaysia is to
A. provide low - interest loans to all financial institutions.
B. control the rate of growth of the money Supply.
C. manage the national debt.
D. none of the above.
8. A
partnership for a
specific business acfivify where the leader does not on
provide the capital but also participates in the
management is known as
A. al-Wakalah
B. al-Murabahah
C. al- Mudharabah
D. al-MUsyarakah
9. Which of the
following statements is incorrect?
A. Ihere is a
precautionary demand for money because of
unceriuy
the
receipt of future income.
5.
Ine precautionary demand for money is
unaffected by the
oppo
holding Ml balances.
.Ihere Is a
precautionary demand for money because o
expenditures.
D. The
precautionary demand for money is not related fo
inc
ty about
JnityCOS
oected
e.
10.
Thespeculative motive of
demand for money depend may the
A. interest rate
B. money supply
C. level of
income
D.
general price level
11.Which of the
following is not an
Islamic financia
A. A-Falah.
al producte
B. Al-Wadiah.
C. Al-MUSsyarakah.
D. A-Mudharabah.
90
5. Chapter 4: Money, Banking and Financial institutions
laved that people wanted fo hold money for three (3) purposes
1 2 . K e y n e s b e l i e v e
n a m e l y
T r a n s a c t i o n
P r e c a u t i o n a r y
i. Speculative
Wealth
iv.
Liquidity
V.
A. iv), and (v)
B. (i), (ii) and fiv)
C. i). (i), and (i)
D. All of the above
13. Which of the following may increase money supply in an economy?
A. An increase in the discount rate.
B. A decrease in the discount rate.
C. An increase in reserve requirement.
D. Bank Negara Malaysia sells government
securities in the open
market.
14. The three main tools of monetary policy are
A. fax rate, government
expenditures
and open
market operations.
B. discount rate, reserve ratio and open
market operations.
C.government
expenditures,
reserve ratio and discountrate.
D. tax rate, discount rate and open
market operations.
5. In lslam, the owner of liquid capital uses his capital for investment through the
mode of
A. al- 'araf
B. al-falah
C. al- wadiah
D. al- mudharabah
6. Nadia deposits RM100 into her savings
account every
month. Her daughter,
Maisarah keep all her coins in Affin Bank.
functioning as
These are examples of money
A. a standard of deferred paymenfs.
B. a store of value.
C. a medium of exchange.
D. commodity money.
6. Chapter4:Money, Banking and Financialinstitution
QUESTION 6
The table below presents the monetary aggregate money supply for Malavsin
2014.
tems
RM million
Demand deposits
2 620
Fiat money
500
Savings and fixed deposits in commercial banks 2300
Traveler'scheques
650
Savings and fixed deposits with other banking institutions 3 400
Saving in trust units (ASB, ASN)
Saving in Bank
Simpanan Nasional
6600
2 130
Calculate:
7. Chapter 4: Money, Banking and Financial Instifutions
QUESTION 8
The following table contains the information about the components ot money
Supply of a country.
Items
RM million
Fiat money
9 700
Paper money
6740X
Fixed and savings deposits in commercial banks
13 600
Fixed and savings deposits in other financial institutions 7 800
Negotiable certificates
3 690
Central Bank certificates
10 000
Current deposits in commercial banks
11 600
a Calculate the values for MI, M2 and M3. 170o + )%dy 2
212o 0
b) Define near money and calculate its value.
cl List any two (2) monetary fools tnar ne
government Can usa to reduce money
Supply in the economy.
8. Chapter 4: Money, Banking and Financial Institutions
QUESTION 9
a The following data are money supply in year 2015.
RM million
Ifems
8 400
Negotiable certificate
32 000
Current deposits in commercial banks
18 400
Fiat money
9030
Paper money
6 222
Savings deposits in commercial banks
20 400
avings and fixed deposits in other financial institution
7 600
Fxed deposits in commercial banks
Cons
i)
i)
ii
Calculate the amount of foken money. |6400- Q030 - 437d
Calculate the value ofMl and M3(8400 T32dov Joyoo (m/)
What is the amounfor brOaa moneyeM3-m = 426 >v
b Given cash ratio is 7%; how muCn
creai Canbe created if initial denait
RM1000e
9. Chapter 4:Money, Banking and Financial Institutions
QUESTION 13
The following table shows the balance sheet of Bank A. (figures are in million)
Assets Liabilities
Cash reserves RM 60 000 |Current deposits RM 300 000
Loans RM 240 000
Total RM 300 O00 Total RM 300 000
6 0 v o 0
0 2 0 t r -
a) Calculate the cash reserve ratio. 200
b Based on the cash reserve ratio in question (a) dbove, how much credit can be
created by Bank A?
C) Assume that a borrower takes a loan of RM240 000 from Bank A and deposits it in
Bank B, with the same cash reserve requiremenf, show the new balance sheet of
3 0 0 0 0
Bank B.
d)Calculate the amount of credit created by Bank B.
Define money supply M1, M2 and M3.
10. Chapter 5: Public Finance Chapter 5: Public Finance
5. Mariani pays a tax of RM300 on her income of RM60.000, while t .
of RM120 on her income of RM40,000. This tfax structure is
while Jovita pays a
tax 11. Thefollo
fallowing
are fhe
SOUrces or governmentrevenue except
A. constant.
B. regresSive.
C. progressive.
D. proportional.
A. court fines
B . r a n s t e r p a y m e n t
C.
corprafe
i n c o m e
tax
D.
loan
from
fhe world bank
12 If a person is faxed RMI00 on an income of RM1000, taxed RM220 on an income
of RM2000 and taxed RM390 on an income of RM3000, this person is paying a
6. The following are the government operating expenditure except
A. Emoluments.
B. upgrading facilities.
C. Subsidies. A. excise fax
B. regressive tax
C. proportional tax
D. progressive tax
D. pension.
7. A federal budget deficit ocCurs when
A. there is inflation.
B. there is deflation.
13. Which of the following is not a source for an islamic governmenf?
C. aggregate demand is grater then aggregate supply.
D. federal government purchases exceed net taxes.
A. Gharar.
B. Jizyah.
C. Zakat.
D. Khara.
8. Budget deficit tends to
4. Table 1: Income Tax paid at Various
Income
Level
Country I
100
200
300
Countryll Country V
100
160
180
A. reduce inflation.
B. reduce unemployment.
C. reduce aggregate demand.
D. give no effect on the
economy.
Income
1000
2 000
3 000
Country
200
200
200
100
300
600
9. AsSume an
economy Is ar tul
employment but
planned investment exceeas
planned saving, ofher things being equal, what fiscal policy actions would besi
address these problems? Which of the following
country is implanting
a
propotional
tax rate?
A. Increase taxes and decrease
government spending.
B. Increase both taxes and
government spending.
C. Decrease taxes and increase
government spendina.
D. Decrease both faxes and
governmenf spending.
A. I
B.
C. I
D. IV
A. cutting
both
g O v e r n m e n f
expendiTures
and tax
r e v e n u e s .
B. cutting
g o v e r n m e n t
expendirures
and rising fax
r e v e n u e s .
C. raising
both
tax revenues and
g o v e r n m e n t
e x p e n d i t u r e s .
D.
cutting
tax
r e v e n u e s
a n a nising
g o v e r n m e n t
e x p e n d i t u r e s .
10. Fiscal policy includes the following except
15. Which of the
following
would
i n c r e a s e
real
GDP of an
e c o n o m y ?
A.
changes in government expenditures.
B. changes in sales tax.
C. changes in interest rates.
D. changes in income tax.
11. Chapter 5: Public Finance
QUESTION4
The following table shows government spending and fax revenue for a hypothei-
economy over a five-year period. All figures are in millions.
Year Govenment Revenue (RM)
Government Expenditure(RM
2012
825
800
2013
850
850
2014
875
900
2015
900
950
2016
925
1000
a) In what year was there a
budget surplus and what was tne
b) In what years were there budget deficits and what were tne
c) What is the total amount of
public debt in this econoy
period?
what was the amounts?
ere the amounts?
er
the fiveye
12. Chapter 5: Public Finance
QUESTION 7
Given the amount of taxes as follows.
Country A Countryy B CountryC
Tax paid ($) Tax paid ($) Tax paid ($)
Income ($)
600 1200
600
3000
1500 1200
1200
6000
2700 1350
1800
9000
a Clasify tax structure
implemented by country A, B, and C.
13. Chapter 6: Macroeconomics Problems
Chapter 6.
Part A: Multiple Choice Questions
dividuals to find jobs because
The unemployment rate is the
cyclically unemployedindivi
isdifficultfor
7.
A. percentage of the total population which is out of work.
B. ratio of unemployed to employed worker.
C. percentage of the labor force which is out of work.
D. none of the above.
A.
the
e c o n o m y
iS in
r e c e s s i o n .
A they
have
not
l o O k e d long
enough to find a job.
C.they quit
fheir at last jod
dnd
employers
view the suspicion.
O they do not meet fhe
q u a l i t i c a f i o n s
required for the available jobs.
2. The type unemployment that occurs during recessions is
8.
Demand
pull
inflation may
be caused by
A. cyclical unemployment.
B. frictional unemployment.
C. seasonal unemployment.
D. structural unemployment.
A. a fall in per
unit cost of
production.
B. an
i n c r e a s e in
r e s o u r c e
availability.
C. an
i n c r e a s e in the aggregate
d e m a n d .
D. an
i n c r e a s e in fhe wage
rate.
3. People who are not working will be counted as
employment if they aree
9.
Cost-push
inflation is due to
A. retrenched.
B. quit voluntarily.
C. absent from the job because of bad weather
D. all of the above.
A. foo much money
chasing
too few goods.
B. increase in prices of
r e s o u r c e s .
C. e x c e s s
total
c o n s u m e r
spending.
D. the e c o n o m y
operating
at full level of
e m p l o y m e n t .
4. Which one of the following groups benefits from inflation?
A. Savers.
i n e
g o v e r n m e n t
c a n
reduce
u n e m p l o y m e n t
orreduce
infiation by
B. Lenders.
A. Curbing the level of
immigration.
B.
m a n i p u l a t i n g
aggregate
demand.
. m a n i p u l a t i n g
the
a v a i l a b i l i t y ofnatural
r e s o u r c e s .
D.
m a n i p u l a t i n g
the
a v a i l a b i l i t y
of capital
r e s O u r c e s .
C. Borrowers.
D. Pensioners.
5. Inflation rate is measured using
A. consumer price index (CPI).
B. cost of production.
C. unemployment.
D. interest rate.
l o help
close an
inflationary
gap,
the
g o v e r n m e n t
couId
A. decreasetaxes
. I n c r e a s e government
spending.
C. run
budget
deticits.
D. run
budget
s u r p l u s e s .
6. Which of the following types or
unemployment is
generally
duration?
A.
d e c r e a s e
a g g r e g a r e
supoiy
and
Causing
c o s t - push
inflation.
B.
i n c r e a s e
a g g r e g a r e
suppIy
and
C d u s i n g
c o s t - p u s h
i n f l a t i o n .
C.
i n c r e a s e
a g g r e g a t e
supply
and
c a u s i n g
D . i n c r e a s e a g g r e g a t e
2.
I n c r e a s e
in oil
prices
in
2008
A. Cyclical.
B. Structural.
C. Disguised.
D. Frictional.
regate
supplyand
causing
d e m a n d - p u l l
inflation.
ate
d e m a n d
and causing
d e m a n d -pull
i n f l a t i o n .
hortest
14. Chapter 6: Macroeconomics Problems
QUESTION 4
Answer the following questions based on the table below.
Component
Number of people (million)
90
Working full time
50
Under 16
40
Retired
30
Working part time
5
Unemployed
Calculate
aLaborforce.
b) Unemployment rate.
15. 16. Given the
narticular
commodity
compared to another
same amount ot resource, It one COuntry Can produce more of a
ompared to another country, that county is said to have
11.Thesituationwhen a country exports more than it imports is knownq
A. an expansion.
B. a term of trade.
A. productive advantage.
B. a
comparafive
advantage.
C. an
absolufe
advantage.
D. ratio of exporf price index to import price index.
C. a trade surplus.
D. a budget surplus.
12. Special drawing rights are
17. The main reason why one nation trades with another is to
A. a form of international reserve holdings created by fhe IMF to help maintain
purchasing power parities.
a form of international money created by the IMF that member countries can
Use to settle international accounts.
A. improve political alliances.
B. exploit fhe advantage of specialization.
C. save its natural resources from rapid depletion.
D. eliminate the danger of retaliation from other nations.
a form of international barier to trade created by the IMF to help maintain
fixed exchange rates between member countries.
D. none of the above.
18. An increase in demand for Ringgit Malaysia in the floating exchange rate system
will lead to
13. If the exchange rate of yen for dollars increase from 100 yen =USD1 to 110 yen =
USD1, then
A. the yen has
appreciated.
B. the dollar has
depreciated.
C. Japanese goods will become more
expensive.
D. U.S
produced goods wll become more
expensive.
A. an appreciation of Ringgit Malaysia.
B. a depreciation of Ringgit Malaysia.
C. along-term shortage of RinggitMalaysia.
D. a long-term surplus of Rin9git Malaysia.
14. A
country is said fo have a
comparative advantage in the
production of a goO0
. Which of the followings
not
included in the current
account
balarnce?
when it A. Net income.
B. Curent transfer.
C. Financial account.
D.
Balance of goods
and services
A.
requires fewer labor hours to
produce the good.
B. has lower
opportunity cost of
producing the good.
C. can
produce the good uSing Tewer
resources than another country. 20. Based on the
information given in the
table below,
if these
countries
produce
a c c o r d i n g
to their
c o m p a r a t i v e
a d v a n t a g e s ,
Country Y should
D. all of the above.
Cakes
15.Balance of trade, services balance and net
transfers are
three
components in
Bread
8
Country
24
A. curent accounf. 16
24
B. capital account.
balance account.
D. official financing account.
A. not
produce
b r e a d or
cakes.
B.
produce
b o n bredd
and
cakes.
C. produce bread.
D . p r o d u c e c a k e s .
16. Chapter 7: International Trade
QUESTION 8
Given below are the production possibilities of two cOuntries in producing cow and
tuna using the same amount of resources.
CountrY Cow Tuna
120 240 V
Japan
300 60
New Zealand
a) Construct a table to show the opportunity cost of each product for each
cOuntry.
b) Based on the value of the opporfunify cost which country should specialize in
which production?
Construct a table to show fofal oufput situation after specialization.
product for each
c)
d) What term of trade will benefit both countries?
Explain two (2) tools used to restrict imports.
e
17. Chapter 7: Intemational Trade
QUESTION 16
The following data shows the Balance of Payment for Country Z in the year 2015.
items
RM millioon
Exports
2100
Education
1 820
Transportation
6 580
Imports
1470
Income from investment
6160
Government transaction
2 870
Insurance
1050
Direct investment
3 500
3 220
Other services
6 300
Error and omission
Capitoltransfer
CApt- CA
5 950
2 030
Secondary income
3 640
Portfolio investment
700
Disposal of
N o n - P r o d u c e d
N o n - F i n a n c i a l
assets.
Based on the given
i n f o r m a t i o n ,
calculate;
a
B a l a n c e of trade.
210u
- } : 63
b)
Balance
of
services. lE2ot 65yo taeio + 1oTo t 30
ISSo
cl
Balance ofcurenfaccount.
b %o+ Iss40 + 66, *5zo* 2y36,
d)
Balance
of capital
and
financial account. o a
e)
Overall
b a l a n c e .
3430 t13790t
63e0 4f»
S150
36yo+
700 =
($7so
f) The
effect on
r e s e r v e s
assers of this country.
Suvptus 1»o P>
m 444So
18. Chapter 7: International Trade
QUESTION 23
The balance of payment data for one country is shown below.
RM Million
Items
17 600
Compensation of employees
10 240
Direct investment
42 880
Services imports Cve)
Investment income 29 360
Merchandise exports 59 360
Telecommunications 34 000
Secondary income 5 040
Merchandise imports 41 840
Eror and omission
2 800
Calculate:
a) Balance oftrade. 51340 -qi&yo 195
DBalance of current account. s>o +(q s8on+3vooo)+ ( 17 6o0 + A3667 sogo*
c) Overall balánce.
6o64o+to2qo + 2800 ts8 banpwa)
19. Chapter 7: International Trade
QUESTION 24
The following table
following table shows the Balance of Payments for a country in the year2015.
Items RM million
Exports 47,000
Imports 19,500
Insurance and pension services 800
Educafion
21,000
Travel
15,000
Acquisition of Non-Produced Non-Financial assets. 11,100
Secondary income
700
Direct investment
3,200
5,150
Tourism and transportations
950
Eror and omissions
2.700
Capital
transfer Cta ace 3,700
Primary income 8,000
P o r t f o l i o i n v e s t m e n t
Ihe
B a l a n c e of
Services
o t
0 o 0 *
I S O o 0 + SI5o =4
14 5o
a)
Calculate:
The
C u r e n t
Account
B a l a n c e ( + 7 o e
-
14Soo)
ryl45*
7 0 t
3100
R R *
7
b
S o + 70o t 3700
738S
d)
The
Overall
B a l a n c e
738s0+
o0 + Gso =
q t o o u yh
d)
C)
The
Capifal
Account
B a l a n c e
I o o
+3203
* l 7 0 0 + o
oo
25
oo0
c) ets of this country? State the value of reserves
e)
W h a t is the
e f f e c t
assets.
effect on
r e s e n v e s
assets
e