Subject Name Economics

Topic Introduction to Macroeconomics

Week 1- Tutorial

A1. Macroeconomics is concerned with the study of

a. Malaysian’s response towards changes in the price of salt

b. production method and costs
c. the effect of reduction of wages on service sector
d. the general price level

A2. For an economy as a whole,

a. income is greater than expenditure

b. expenditure is greater than income.
c. income is equal to expenditure.
d. GDP measures income more precisely than it measures expenditure.

A3. These are not macroeconomic objectives except ______.

a. unemployment
b. price stability
c. instability economic growth
d. unequal distribution of income

A4. Government policies regarding money supply are called ________.

a. fiscal policies
b. growth policies
c. monetary policies
d. supply side policies

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A5. In the circular-flow diagram, households makes revenue through ______ market and
expenditure through ______ market

a. product ; resource
b. resource; product
c. capital; consumer
d. consumer; capital

A6. Each of the following items is a component of expenditure approach except

a. personal comsuption
b. net interest
c. import
d. exports

A7. Which of the following typically rises during a recession?

a. garbage collection
b. unemployment
c. corporate profits
d. automobile sales

A8. What is GDP? Discuss three approaches in Measuring GDP? Do you agree a rise in GDP
means that cost of living in the country has decreased.

A9. Table below shows the national income accounting data for the year 2014 in Country A.

Items RM (Million)
Depreciation 560
Gross private domestic investment expenditures 5980 Using
Imports 9900
Exports 3000
Federal government expenditures 7900
State and local government expenditures 1653
Personal consumption expenditure 8960
Transfer payments 300
Receipts of factor income from the rest of the world 930
Payments of factor income to the rest of the world 1890

expenditure approach, calculate the following values:

(i) Gross domestic product (GDP)

(ii) Net domestic product (NDP)

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 (iii) Net national product (NNP)

(iv) Real GDP (assume that the price index is 115)

(v) GDP per capita (assume that the population of Country A is 4 million)

A10. Explain TWO (2) limitations of GDP measurement.

A11. Why do economists include only final goods and services in measuring GDP for a
particular year? Why don’t they include the value of the stocks and bonds bought and
sold? Why don’t they include the value of the used furniture bought and sold?

A12. Explain why an income equal expenditure.

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