CONFIDENTIAL, BAWJUL 2023/EC0211/210/164/219 SF Se UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION ‘COURSE MACROECONOMICS COURSE CODE £C0211/210/164/219 EXAMINATION JULY 2023 TIME 3 HOURS INSTRUCTIONS TO CANDIDATES 1, This question paper consists of two (2) parts: PART A (40 Questions) PART B (4 Questions) 2. Answer ALL questions from all two (2) parts i) Answer PART A in the Objective Answer Sheet. ii) Answer PART B in the Answer Booklet. Start each answer on a new page. 3. Donot bring any material into the examination room unless permission is given by the invigilator. 4. Please check to make sure that this examination pack consists of i) the Question Paper ii) _ an Answer Booklet - provided by the Facuty ji) an Objective Answer Sheet ~ provided by the Faculty 5. Answer ALL questions in English DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO This examination paper consists of 17 printed pages (© Hak Cipta Universit! Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 2 BAJJUL 2023/EC0211/210/164/219 PARTA Answer ALL questions. QUESTION 1 Macroeconomics theory studies the fcllowing except A international sector activities B total product produced within a country in a given time period the unemployment and inflation rate. D_ the type and quantity of goods to produce (1 mark) QUESTION 2 Which of the following is related to macroeconomics analysis? A The economics activities deal with household ard firm decision. B The economics studies the national income C The economics analyses the demand for supply of gocds and services. D_ The economics studies the individual income. (1 mark) QUESTION 3 Which of the following is a macroeconomics statement? ‘A. The cost of production has increased when the price o* petrol increases about 8.5% B PROTON profit increases every year since the companies improve the design of theirnew model. C The inflation rate of Malaysia is 3.6% in 2020, D The price of shrimp increases during Chinese New Year because the demand increases rapidly while supply is constant. (1 mark) QUESTION 4 Which of the following is NOT a macroeconomic issue? ‘A. Unemployment. B_ The wages paid to lecturers. © Economic growth D_ National income (1 mark) © Hak Cipta Universiti Teknologi MARA : CONFIDENTIALCONFIDENTIAL 3 BAJJUL 2023/EC0211/210/164/219 QUESTION 5 ‘These are macroeconomics goals except. A having zero unemployment rate B_ increase in the production of good & services. C_ maintaining low inflation rate D_ reduce inequality between higher and lower income. (1 mark) QUESTION 6 The main difference between GDP and GNP is that GDP excludes A_ net income earned abroad. B consumption of fixed capital transfer payment. D_ government purchases, (1 mark) QUESTION 7 Problem of double counting can be avoided by A. calculating final goods and services only. B calculating intermediate goods and services only. © calculating both final and intermediate goods and services. D calculating primary, intermediate, and final goods and services in the market. (1 mark) © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, 4 BAJJUL 2023/EC0211/210/164/219 QUESTION 8 Circular flow of income in a two-sector economy diagram shows, household makes income through a___ market and expenditure through a__ market. A product; resource B resource; product C__ intermediate goods; services D_— money; investment (1 mark) QUESTION 9 “The total market value of all final goods and services in a civen period of time by factors of production located within a country’ is a statement that defines the concept of, A total output. B_ national income. C_ gross domestic product. D_ net domestic product. (1 mark) QUESTION 10 If Real GDP is RMS500 millions and the population is 10 millions, what is the Real GDP per capita? RM5,000 millions. RME50 millions. M500 millions. RM2,500 millions. com> (1 mark) QUESTION 11 If the consumption function is C = 250 + 0.75Y and investment, | = RM450, find the equilibrium income in this two-sector economy. A RM2800. B RM3600. © RM7200. D_ RM9000. (1 mark) © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 5 BAJUL 2023/EC0211/210/164/219 QUESTION 12 Consumption is a function refers to the relationship between consumption level and A. saving level. B_ income level C_ investment level. D_ produetion level (1 mark) QUESTION 13 Investment may decrease due to A. an increase in interest rate. B an increase in profi. C an increase in business optimism, D a decrease in tax rate. (1 mark) QUESTION 14 If the marginal propensity to consume is 0.9, then the marginal propensity to save must be Aq B14 c 01 D og. (1 mark) QUESTION 15 National income equilibrium occurs when ‘A demand equals supply in the product market. B aggregate demand equals aggregate supply in the procuct market. C_ aggregate expenditures equal aggregate supply in the economy. D_ total injections exceed total leakages. (1: mark) (© Hak Cipta Universiti Teknologl MARA CONFIDENTIALCONFIDENTIAL, 6 BAWJUL 2023/EC0211/210/164/219 QUESTION 16 Which of the following is a function of money? A. Acceptability B Portability. © Medium of exchange. D_ Relatively scarce. (1 mark) QUESTION 17 Money must be strong enough to be used, kept for ¢ long time and must endure the wear and tear of many people using it repeatedly. This is the concept of A. Divisibilty B Limited supply © Durabiity D Acceptability (1 mark) QUESTION 18 Any item issued by the central bank and government declared as a money is called as Fiat money. Plastic Money ‘Commodity money. Bank Money voma> (1 mark) QUESTION 19 In econorrics terms, what does it mean if something has liquidity? ‘A. The asset can be easily traded for water. B_ The asset can be a solid or a gas depending on the temperature C The asset can be easily used or converted into cash. D_ The asset takes a long time to be converted into cash. (1 mark) (© Hak Cipta Universiti Teknologi MARA. CONFIDENTIALCONFIDENTIAL, 7 BA/JUL 2023/EC0211/210/164/219 QUESTION 20 The main reason that people hold money ‘to buy things’ is referred to A. the precautionary motive. B_ the profit motive. C the transactions motive D_ the speculative motive. (1 mark) QUESTION 21 ‘As the number of goods and services increases, the barter system becomes inefficiencies A. because it is harder to get a double coincidence of wants for many goods and services at once. B_ because that is easier to get a double coincidence of wants for many goods and services at once. C_ because there is a standard measurement of a double coincidence of wants for goods and services. D Because it is easier to divide the good to a smaler unit. (1 mark) QUESTION 22 Which of the following may increase the money supply in en economy? ‘A A decrease in the discount rate B_ Anincrease in the discount rate. © Aninerease in reserve requirement D_ Bank Negara Malaysia sells goverment securities in the open market (1 mark) QUESTION 23 The speculative motive of demand for money depends ma nly on the ‘A money supply. B interest rate C level of income. D_ general price level. (1 mark) (© Hak Cipta Universiti Teknolog! MARA CONFIDENTIAL,CONFIDENTIAL, 8 BA/JUL 2023/EC0211/210/164/219 QUESTION 24 Bank Negara Malaysia is often considered as a banker because it ‘A. demands more money than what it has. B_ has no monopoly power in printing paper money. C lowers the discount rate to restrict the money suoply D_ holds bankers’ reserve, provides banks with currency end loans, and clear checks. (1 mark) QUESTION 25 Bank Negara Malaysia (BNM) should implement expansionary monetary policy to reduce unemployment by A. increasing interest rate. B_ increasing discount rate. C_ increasing required reserve ratio. D_ buying securities in an open market operation. (1 mark) QUESTION 26 ‘A federal budget deficit occurs when A. there is inflation. B there is deflation C federal government purchases exceed net taxes D_ aggregate demand is greater than aggregate supply. (1 mark) QUESTION 27 The followings are the sources of government revenue except A court fines. B_ transfer payment. C corporate income tax. D loan from the Intemational Monetary Fund (IMF). (1 mark) © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 9 BANJUL 2023/EC0211/210/164/219 QUESTION 28 The intended goal of expansionary fiscal and monetary policies is A. an increase in the price level. B an increase in interest rates. C_ equal distribution of income. D_ an increase in the level of aggregate output. (1 mark) QUESTION 29 Which of the following is not a source for an Islamic government? A. Kharaj B Jizyah. C Zakat. D. Gharar. (1 mark) QUESTION 30 At-kharaj A refers to movable possessions taken in battle for enerry. B_ is imposed on all agricultural land owned by non-Muslims. Cis imposed on the non-Muslim in lieu of guarantee to them by an Islamic state. D_ is donated by individual for the use of certain group of Muslims such as orphans and poor. (1 mark) QUESTION 31 The inflation rate is measured using Consumer Price Index (CPI. cost of production. unemployment. interest rate. com> (1 mark) (© Hak Cipta Universiti Teknologi MARA, CONFIDENTIALCONFIDENTIAL, 10 BAJJUL 2023/EC0211/210/164/219 QUESTION 32 Demand-pull inflation may be caused by A _afall in per unit cost of production Ban increase in resource availability. Can increase in the aggregate demand. D_ an increase in the wage rate, (1 mark) QUESTION 33 The type of unemployment that occurs during recessions is A. cyclical unemployment. B_ frictional unemployment C seasonal unemployment D_ structural unemployment (1 mark) QUESTION 34 ‘Muaz decides to join the aerospace-UMS program after he completed his digloma program. He is Aa discourage worker. B considered as unemployed. C_ not counted as part of the labour force. D counted as part of the labour force, but not considerec as employed. (1 mark) QUESTION 35 Consider an economy made up of 100 people, 50 cf them hold jobs, 10 of them are looking for work, and 15 of them are retired. The unemployment rate is approximately A. 20 percent. B_ 12 percent. C 17 percent. D 10 percent. (1 mark) (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL, "1 BAJJUL 2023/EC0211/210/164/219 QUESTION 36 The ratio at which nations will exchange goods and services is known as the A. exchange rate. B_ balance of goods and services. C discount rate. D_ terms of trade. (1 mark) QUESTION 37 What is the meaning of embargo? A Government restricts the supply of foreign currency in the country. B_ Government directly bans items into the country due to economic reasons. C Policy to protect. D_ Restriction on the volume of import. (1. mark) QUESTION 38 Which of the following is true about quota? ‘A. A\limit on the quantity of imported products B_ The law that bats trade with another country. C The ability of imported products to compete with domestic products D_ The prices of imported products to domestic corsumers. (1 mark) QUESTION 39 A balance of payments is A any transaction that supplies the domestic country’s currency. B_ the identity that illustrates the balance between exports and imports © a record of the payments made by one company in one country to another company in another country. D a periodic statement of the monetary value of all transactions between residents in one country and residents of all other countries. (1 mark) (© Hak Cipta Universiti Teknolog! MARA CONFIDENTIAL,CONFIDENTIAL 2 BAVJUL 2023/EC0211/210/164/219 QUESTION 40 The flexible or floating exchange rate is determined by the A. price of gold. B World Bank. C Bank Negara Malaysia D_ forces of supply and demand. (1 mark) (© Hak Cipta Universiti Teknologi MARA. CONFIDENTIAL,CONFIDENTIAL, 13 BAJJUL 2023/EC0211/210/164/219 PARTB ‘Answer ALL questions. QUESTION 1 It is given that the assets and liabilities for Bank AT consist of cash and deposits from customers where the total deposit is RM350,000. The bank also has to meet cash reserve requirement of 25% set by Bank Negara Malaysia a) b) °) d) e) Prepare a balance sheet for Bank AT based on the information given. (2 marks) Calculate the money multiplier and interpret what it means. (3 marks) Calculate total money supply created at the end of the process. (2 marks) Calculate the amount of total credit created. (2 marks) ‘Assuming Bank AT loans out its excess reserve to Kak Eton and she deposited the money in Bank SJ. With the same cash reserve requirement, show the new balance sheet of Bank SJ. (2 marks) Briefly explain two (2) functions of money. (4 marks) (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL‘CONFIDENTIAL 14 BANJUL 2023/EC0211/210/164/219 QUESTION 2 a) The following table shows government spending end tax revenue for a hypothetical economy over a six-year period. All figures are in rrllions. | Government Spending | Tax Revenues (RM) (RM) 2016 83,000 82,500 2017 85,000 85,000 2018 90,000 92,500 2019 98,000 90,000 2020 110,000 100,000 2021 125,000 130,000 i) _ In what years were there budget deficits and what were the amounts? (3 marks) ii) In what years were there a budget surplus and what were the amounts? (2 marks) iii) | What type of budget did the government in 2016 implement? Justify your answer. (2 marks) b) The table below shows the total tax paid by individuals in country AA, BB and CC at different income levels. Income level (RM) | 10,000 | 20,000 | 30,0C0 | 40,000 Country AA | Tax paid (RM) 00 | 1800 | 3600 | 6000 Tax rate (%) Income level (RM) | 8,000 | 17,000 | 12,060 | 15,000 Country BB [Tax paid (RM) 480 | 660 | 720 | 900 Tax rate (%) _ Income level (RM) | 5,000 | 7,000 | 9,009 | 11,000 Country CC | Tax paid (RM) 500 | 630 | 720 | 770 | Tax rate (%) = jy Caloulate the tax rate for each individual at every income level hn courtry AA, BB and CC. (3 marks) ‘© Hak Cipta Universit Teknologi MARA CONFIDENTIALCONFIDENTIAL, 15 BANJUL 2023/EC0211/210/164/219 ii) Determine the tax structure adopted by each country. (3 marks) ili) Briefly explain the difference between direct tax and indirect tax. (2 marks) QUESTION 3 a) Nation A uses all its existing resources to produce 80 tons of tea or 120 tons of aluminum. In nation B, all its existing resources can produce either 40 tons of tea or 80 tons of aluminum. Constant ccst prevails in both ccuntries, i) Before specialization, both nations use only Falf of its resources to produce and consume each good. How many tons of tea and aluminum do Nation A and Nation B produce? (2 marks) ii) Using comparative advantage theory, determine the goods that Nation A and Nation B will specialize in. (2 marks) iii) Which nation will import aluminum? (1 mark) iv) _ If international trade takes place between these two countries at an exchange rate of 2 tons of aluminum for 1 ton of tea, calculate the amount of output produced by both nations after specialization and exchange took place. (4 marks) b) Briefly explain two (2) tools of protectionism oolicy “hat a country can practice. (4 marks) (© Hak Cipta Universit Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 16 QUESTION 4 The following data represent the balance of payment for a country in year 2015. BA/JUL 2023/EC0211/210/164/219 Items ~ [RM million Current account Export 72,806 Import 67,00C Trade balance 5,800 [Freight and insurance (net) =3,300 Travel (net) 990) Government transaction (net) - = 275 Other services (net) = 7,040 Balance on services (2) Investment income (net) =2,320 ‘Transfer payments (net) 245 Balance on current account @) [Capital account _ Official long-term capital (net) = 809 Corporate investment (net) 6810 Private financial capital (net 1,705 Direct investment _ = 500 Balance on capital and financial account Error and omission _ 135 ‘Overall balance @ Government official financial account : BNM reserves (net) (e) Based on the table above, calculate: a) b) °) d) Balance on services Balance on current account Balance on capital and financial account Overall balance © Hak Cipta Universiti Teknologi MARA (2 marks) (2 marks) (2 marks) (2 marks) CONFIDENTIAL,CONFIDENTIAL, 7 BA/JUL 2029/EC0211/210/164/219 e) _ BNM Reserves (1 mark) f) Briefly discuss two (2) measures to correct disequilibrium in balance of payments. (6 marks) END OF QUESTION PAPER (© Hak Cipta Universiti Teknolog! MARA CONFIDENTIAL