BACHELOR OF BUSINESS AMINISTRATION

(MANAGEMENT INFORMATION SYSTEMS)

MACROECONOMICS

(EC151)

MID TERM TEST

2.0 HOURS

NAME/STUDENT ID : Yousif Abdallah Mahmoud

COURSE TITLE : MACROECONOMICS

COURSE CODE : EC151

INSTRUCTOR : MR. GOPIDEVANATH A/L DEVARAJAN

INSTRUCTION TO CANDIDATES:

This examination consists of One (1) section.

Answer ALL the questions from Section A.
This question paper consists of 2 printed pages excluding the cover page.
Course: Macroeconomics (EC151)

SECTION A (50 MARKS)

ANSWER ALL QUESTIONS FROM THIS SECTION

Q1 Identify three key reasons to study economics. Think of an example from your life in
which understanding opportunity costs or the principle of efficient markets
could make a difference in your decision making.

Ans: 1- affecting everything, our daily lives are influenced by economic challenges.
Concerns like tax and inflation, wealth and interest rates, inequality and developing
markets, and energy and the environment are included in this. Economics is a vast
field that offers solutions to a variety of social, political, and health concerns that affect
families and larger populations.
2- industry is impacted, Economic principles are used by businesses of all sizes and in
all sectors, whether it be for product creation, price decisions, or marketing initiatives.
Due to its broad impact, studying economics may lead to a wide range of job
opportunities in all areas of the economy, including banking, consulting,
manufacturing, and agriculture.
3- International perspectives, the world in which we live is impacted by economics.
Recognizing both indigenous and foreign viewpoints may give important information on how
various cultures and communities interact. For multinational firms, success depends on having
a solid grasp of the global economy.
(4 marks)

Q2 As long as all resources are fully employed and every firm in the economy
is producing its output using the best available technology, the result will
be efficient.” Do you agree or disagree with this statement?
Explain your answer.

Ans: Yes, because when it is said that the firm is working with its full capability and resources,
and implementing the latest technologies, that means that they are giving their all to reach their
goals and make their company as competitive as it can gets, plans are efficient, good teamwork
is in place, the top management is directing the firm professionally into achieving the
organizational goals. (3 marks)

Q3 Explain the two main causes of market failure with an example.

Ans: 1- Monopoly firms: A monopoly firm can control the whole market by itself and be the only firm
offering a product for the consumers, and that’s one of the things that cause market failure.
2- Public goods: A market can fail due to consumers not paying for those public goods, and because
they can use these public goods although they do not pay for them. (4 marks)

Q4 Three top managers of the Red Bull (Energy Drink) Company are discussing an
increase in production. Each suggests a way to make this decision.
Ferguson: We should examine whether our company’s productivity—gallons of
energy drink per worker—would rise or fall.
Venables: We should examine whether our average cost—cost per worker— would
rise or fall.

Mid Term Test 1

Course: Macroeconomics (EC151)

Marcelo: We should examine whether the extra revenue from selling the additional
energy drink would be greater or smaller than the extra costs.

i) Describe who you think is right. (3 marks)

ii) Justify your answers. (3 marks)

Q5 Illustrate the 4-sector of circular flow of national income and expenditure.

Ans: 1- households. 2- Firms. 3- governments. 4- imports and exports.

(4 marks)

Q6 Consider the following table showing the breakdown of GDP (in billions) for
Singapore.

Government purchases $180 billion

Depreciation $80 billion
Consumption $240 billion
Investment $60 billion
Exports $98 billion
Imports $125 billion
Income receipts from rest of the world $6 billion
Income payments to rest of the world $9 billion

You are required to calculate.

i) Gross domestic product (GDP)= 240 billion+60 billion+180 billion+(98 billion-125 billion)
GDP= 240+60+180-27
GDP= 453 billion (3 marks)
ii) Net Exports= 98 billion-125 billion= -27
(3 marks)
iii) Net National Product (NNP)= GNP= 453 billion-27 billion=426 billion
NNP= 426 billion-80 billion
NNP= 346 billion (3 marks)

Mid Term Test 2

Course: Macroeconomics (EC151)

Q7 List THREE (3) examples of entrepreneurs in the tech industry and the firms
they created. Explain how these people fit the definition of entrepreneur. (6 marks)

Ans: 1- Elon musk, he owns the largest electric cars firm “Tesla”, Elon is known
everywhere as the craziest person and smartest person you can ever meet, and the
main reason that makes him a great entrepreneur is that he inspires people to believe
in his thoughts, which most of them are crazy, and that what made the people love
him and believe in him.
2- Jeff Bezos, owner of amazon, the first thing that makes jeff Bezos a great
entrepreneur is that he is a risk taker, and the main thing he focuses the most on is to
make his customers satisfied and happy.
3- Jack Ma, owner of Alibaba, from being an English teacher to becoming China's
richest person, is one of the entrepreneurs who started from nothing with 0 dollars,
and there is no better way to become a great entrepreneur than by building your own
billionaire empire from nothing.

Q8 Explain what double counting is and discuss why GDP is not equal to
total sales. (4 marks)

Ans: double counting means counting the price of the same products more than one
time. GDP is not equal to total sales because some goods which are sold may have
been sold in a previous year and not listed on the current year GDP.

Q9 The following table shows the disposable income and consumption schedule.

Disposable Consumption
Income
0 35
90 110
190 185
290 260
390 335
490 410

a) Complete the following table schedule with APC and MPC.

APC MPC
N/A N/A
1.2
0.97
0.89
0.85
0.83

Mid Term Test 3

Course: Macroeconomics (EC151)

(4 marks) Q10

Using the Income Approach for Malaysia.

Items RM (Million)
Wages and salaries 500
Income from rent, dividend, and interest 100
Profit 200
Transfer Payment 100
Corporate Tax 80
Depreciation 50
Private Investment 1000
Personal Income Tax 20
Employees Provident Fund 50
Net Factor Income Abroad 400

Calculate the:
a) Gross Domestic Product. (2 marks)
b) Gross National Product. (2 marks)
c) National Income. (2 marks)
Wages and salaries 500
Rent, dividend, and interest 100
Profit 200
Transfer payment 100

END OF QUESTION PAPER

Mid Term Test 4