CH SUM : MACRO ECONOMICS

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Which sector in the circular flow model provides labor and resources?

Households (correct)

Firms

Government

Foreign Sector

What type of market deals in resources like labor and capital?

Goods Market

Foreign Exchange Market

Financial Market

Factor Market (correct)

What is the primary function of the Government sector in the circular flow model?

Provide labor and resources

Trade with foreign countries

Collect taxes and inject spending (correct)

Produce goods and services

What is the term for the movement of goods and services in the circular flow model?

Real Flows Signup and view all the answers

What is the primary function of the Foreign Sector in the circular flow model?

Involve trade activities Signup and view all the answers

What is the term for the financial transactions for goods and services in the circular flow model?

Money Flows Signup and view all the answers

Which market manages the flow of money, including savings and investments?

Financial Market Signup and view all the answers

What is the term for the total economic output at market prices?

GDP Signup and view all the answers

Which sector in the circular flow model utilizes labor and resources to produce goods and services?

Firms Signup and view all the answers

What type of market trades consumer goods and services?

Goods Market Signup and view all the answers

What is the primary objective of the New Economic Paradigm?

To smooth out the volatility in business cycles and achieve stable growth Signup and view all the answers

Which of the following is an example of a leading indicator?

Stock market performance Signup and view all the answers

What is the main purpose of the public sector?

To provide structure and essential services that are not profit-driven Signup and view all the answers

What is the main challenge facing the public sector?

Inefficiency due to lack of clear performance metrics Signup and view all the answers

What is the purpose of the Medium-Term Expenditure Framework (MTEF)?

To plan over a three-year period Signup and view all the answers

What is the primary objective of fiscal policy?

To manage economic activity through taxation Signup and view all the answers

What is the main difference between demand-side and supply-side policies?

Demand-side policies focus on regulating aggregate demand, while supply-side policies focus on increasing productivity Signup and view all the answers

What is the purpose of forecasting business cycles?

To predict future economic activity Signup and view all the answers

What is the main advantage of using econometric models in forecasting?

They are complex algorithms using historical data Signup and view all the answers

What is the purpose of the Laffer Curve?

To illustrate the relationship between taxation and economic growth Signup and view all the answers

What does GNI account for?

All income earned by a country's residents, adjusting for income received from abroad Signup and view all the answers

What is the main difference between the Two-Sector Model and the Three and Four-Sector Models?

The inclusion of government and foreign transactions in the latter Signup and view all the answers

What is the formula for the multiplier in a simple two-sector model?

k = 1 / (1 - MPC) Signup and view all the answers

What is the peak of a business cycle?

The highest point of economic activity Signup and view all the answers

What is an example of an endogenous factor influencing business cycles?

Changes in consumer confidence Signup and view all the answers

What is the primary function of the public sector in South Africa?

To manage resources and provide services not suitable for private sector delivery. Signup and view all the answers

Which theory suggests that business cycles are driven by changes in aggregate demand?

Keynesian Theory Signup and view all the answers

What does the Laffer Curve illustrate?

The relationship between tax rates and tax revenue. Signup and view all the answers

What is the primary goal of monetary policy?

To stabilize economic activity Signup and view all the answers

What is the main difference between expansion and contraction phases of a business cycle?

The direction of economic indicators Signup and view all the answers

What can distort market operations and lead to inefficiencies if not carefully managed?

Subsidies and taxes. Signup and view all the answers

What determines the exchange rates in a free floating exchange rate system?

Market forces. Signup and view all the answers

What is the role of technological innovation in the Schumpeterian Theory of business cycles?

It causes fluctuations in economic activity Signup and view all the answers

What is the balance of payments?

A comprehensive record of all economic transactions between residents of a country and the rest of the world. Signup and view all the answers

What is the goal of fiscal policy during an economic downturn?

To stimulate demand and pull the economy out of a recession Signup and view all the answers

What does a balance of payments surplus indicate?

That the country is exporting more than it imports. Signup and view all the answers

What can central banks do to stabilize or guide the exchange rate towards desired levels?

All of the above. Signup and view all the answers

What affects the supply and demand of currencies in the foreign exchange market?

Both A and B. Signup and view all the answers

What is the current account component of the balance of payments?

Records trade in goods and services, as well as income from investments. Signup and view all the answers

What do policymakers use data from the foreign exchange market and balance of payments to formulate?

Strategies to stabilize the economy, manage inflation, and promote sustainable growth. Signup and view all the answers

What is the primary function of the Foreign Sector in the circular flow model?

To facilitate international trade activities Signup and view all the answers

What is the term for the total economic output at market prices?

GDP Signup and view all the answers

What is the purpose of the Financial Market in the circular flow model?

To manage the flow of money Signup and view all the answers

What is the term for the movement of money for goods and services in the circular flow model?

Money Flows Signup and view all the answers

Which sector in the circular flow model generates revenue and expenditures?

Firms Signup and view all the answers

What is the term for the trade of consumer goods and services in the circular flow model?

Goods Market Signup and view all the answers

What is the primary function of Households in the circular flow model?

To provide labor and resources Signup and view all the answers

What is the term for the market that deals in resources like labor and capital?

Factor Market Signup and view all the answers

What is the primary function of the Government in the circular flow model?

To collect taxes and inject spending into the economy Signup and view all the answers

What is the term for the movement of goods and services in the circular flow model?

Real Flows Signup and view all the answers

What is the purpose of the multiplier effect in economics?

To understand how initial increases in spending lead to a more significant overall increase in economic output Signup and view all the answers

What is the formula for the multiplier in a simple two-sector model?

k = 1 / (1 - MPC) Signup and view all the answers

What is the primary function of the public sector in South Africa?

To provide public goods and services Signup and view all the answers

What is the primary characteristic of the contraction phase of a business cycle?

Economic indicators decline Signup and view all the answers

What is the Laffer Curve used to illustrate?

The relationship between tax rates and tax revenue Signup and view all the answers

What is an example of an exogenous factor influencing business cycles?

Natural disasters Signup and view all the answers

What is the primary function of fiscal policy during an economic downturn?

To increase government spending and reduce taxes Signup and view all the answers

What is the balance of payments?

A record of all international transactions Signup and view all the answers

What determines the exchange rates in a managed floating exchange rate system?

Both market forces and government intervention Signup and view all the answers

Which theory suggests that business cycles are driven by changes in aggregate demand?

Keynesian Theory Signup and view all the answers

What does GNI account for?

All income earned by a country's residents, adjusting for income received from abroad Signup and view all the answers

What is the current account component of the balance of payments?

Records trade in goods and services Signup and view all the answers

What is the primary function of monetary policy?

To stabilize economic activity through monetary tools Signup and view all the answers

What can distort market operations and lead to inefficiencies if not carefully managed?

Subsidies and taxes Signup and view all the answers

What is the primary objective of the New Economic Paradigm?

To smooth out the volatility in business cycles and achieve stable growth Signup and view all the answers

What is the purpose of central banks intervening in the forex market?

To stabilize the exchange rate Signup and view all the answers

Which type of indicator confirms trends that are already in process?

Lagging indicator Signup and view all the answers

What is the peak of a business cycle?

The highest point of economic activity Signup and view all the answers

What is the main difference between the Two-Sector Model and the Three and Four-Sector Models?

The number of sectors modeled Signup and view all the answers

What is the primary focus of supply-side policies?

Increasing productivity and efficiency through technological advancements Signup and view all the answers

What does a balance of payments surplus indicate?

That the country is exporting more than it is importing Signup and view all the answers

What affects the supply and demand of currencies in the foreign exchange market?

Both interest rates and economic stability, as well as geopolitical events Signup and view all the answers

What is the main challenge facing the public sector?

Inefficiency due to lack of clear performance metrics and accountability Signup and view all the answers

What is the primary objective of policymakers when formulating economic policies using data from the foreign exchange market and balance of payments?

To stabilize the economy and manage inflation Signup and view all the answers

What is the purpose of forecasting business cycles?

To mitigate the adverse effects of downturns and capitalize on periods of growth Signup and view all the answers

What is the primary function of State-Owned Enterprises (SOEs)?

To operate in the public interest, managing resources and services Signup and view all the answers

What is the objective of fiscal policy during an economic downturn?

To stimulate economic growth through fiscal stimuli and job creation Signup and view all the answers

What is the purpose of the Medium-Term Expenditure Framework (MTEF)?

To provide a framework for strategic planning and budgeting over a three-year period Signup and view all the answers

What is the primary difference between demand-side and supply-side policies?

Demand-side policies focus on regulating aggregate demand, while supply-side policies focus on productivity and efficiency Signup and view all the answers

What is the main advantage of using econometric models in forecasting business cycles?

They can accurately predict future trends based on historical data Signup and view all the answers

What is the primary focus of the Three and Four-Sector Models in understanding the multiplier effect?

Government and foreign transactions Signup and view all the answers

What is the result of a prolonged contraction phase in a business cycle?

A recession Signup and view all the answers

What is the main challenge facing the public sector?

Lack of accountability and inefficient bureaucracy Signup and view all the answers

What is the primary objective of fiscal policy during an economic downturn?

To stimulate demand and pull the economy out of a recession Signup and view all the answers

What is the primary function of the foreign exchange market?

To facilitate international trade by establishing exchange rates Signup and view all the answers

What is the primary purpose of the circular flow model in an open economy?

To illustrate the interactions between households, firms, and government Signup and view all the answers

What is the impact of a balance of payments surplus?

Net inflow of money into the country Signup and view all the answers

What is the primary effect of the multiplier effect in an open economy?

Increasing the economic output through additional spending Signup and view all the answers

What is the primary factor that distinguishes the Keynesian Theory from the Classical and Neoclassical Theories of business cycles?

Changes in aggregate demand Signup and view all the answers

What is the main advantage of using monetary policy to stabilize economic activity?

It has a faster impact on the economy compared to fiscal policy Signup and view all the answers

What is the purpose of central banks intervening in the forex market?

To stabilize or guide the exchange rate towards desired levels Signup and view all the answers

What is the primary function of the financial market in the circular flow model?

To manage the flow of money, including savings and investments Signup and view all the answers

What is the primary difference between the real flows and money flows in the circular flow model?

Real flows involve the movement of goods and services, while money flows involve the financial transactions Signup and view all the answers

What is the formula for the multiplier in a simple two-sector model?

k = 1 / (1 - MPC) Signup and view all the answers

What is the role of the Laffer Curve?

To illustrate the relationship between tax rates and tax revenue Signup and view all the answers

What is the primary function of the public sector in South Africa?

To provide public goods and services that are not suitable for private sector delivery Signup and view all the answers

What is the primary role of GNI in economic analysis?

To account for all income earned by a country's residents Signup and view all the answers

What is the primary purpose of the foreign exchange market in the circular flow model?

To handle the trading of currencies necessary for international trade Signup and view all the answers

What are the three components of the balance of payments?

Current Account, Financial Account, and Capital Account Signup and view all the answers

What is the primary function of the peak in a business cycle?

To represent the highest point of economic activity Signup and view all the answers

What is the primary metric used to measure the economic performance in the circular flow model?

Gross Domestic Product (GDP) Signup and view all the answers

What is the primary interaction between the government and households in the circular flow model?

Households provide taxes and receive public services from the government Signup and view all the answers

What is the impact of subsidies and taxes on market operations?

They can distort market operations and lead to inefficiencies Signup and view all the answers

What is the primary characteristic of the Schumpeterian Theory of business cycles?

It highlights the importance of technological innovation Signup and view all the answers

What is the primary function of the firms in the circular flow model?

To utilize labor and resources to produce goods and services Signup and view all the answers

What is the primary objective of policymakers using data from the foreign exchange market and balance of payments?

To formulate strategies that stabilize the economy, manage inflation, and promote sustainable growth Signup and view all the answers

What is the primary difference between the expansion and contraction phases of a business cycle?

The direction of economic activity Signup and view all the answers

What determines the exchange rates in a managed floating exchange rate system?

Market forces with occasional government intervention Signup and view all the answers

What is the primary role of the foreign sector in the circular flow model?

To involve trade activities, where exports add to the economic flow and imports lead to outflows of currency Signup and view all the answers

What is the primary effect of the trade activities in the foreign sector on the circular flow model?

Increasing the economic output through exports Signup and view all the answers

What is the primary goal of the New Economic Paradigm in achieving stable growth?

To reduce the volatility of business cycles through balanced policies Signup and view all the answers

What is the primary difference between leading and lagging indicators in forecasting business cycles?

Leading indicators predict future economic activity, while lagging indicators confirm current trends Signup and view all the answers

What is the primary objective of supply-side policies in the New Economic Paradigm?

To increase productivity and efficiency through technological advancements Signup and view all the answers

What is the primary function of State-Owned Enterprises (SOEs) in the public sector?

To operate in the public interest and manage resources and services Signup and view all the answers

What is the primary challenge facing the public sector in terms of accountability?

All of the above Signup and view all the answers

What is the primary objective of the Medium-Term Expenditure Framework (MTEF) in the public sector?

To plan for medium-term expenditure over a three-year period Signup and view all the answers

What is the primary function of fiscal policy in the New Economic Paradigm?

To regulate aggregate demand through taxation and government expenditure Signup and view all the answers

What is the primary purpose of forecasting business cycles in the New Economic Paradigm?

To mitigate the adverse effects of economic downturns and capitalize on periods of growth Signup and view all the answers

What is the primary advantage of using econometric models in forecasting business cycles?

They are based on complex algorithms and historical data Signup and view all the answers

What is the primary objective of the Laffer Curve in fiscal policy?

To illustrate the relationship between tax rates and government revenue Signup and view all the answers

What is the primary difference between the two-sector model and the three and four-sector models?

The inclusion of government and foreign transactions Signup and view all the answers

What is the formula for the multiplier in a simple two-sector model?

k = 1 / (1 - MPC) Signup and view all the answers

What is the term for the highest point of economic activity in a business cycle?

Peak Signup and view all the answers

Which of the following sectors is responsible for injecting spending into the economy through public services and infrastructure?

Government Signup and view all the answers

Which theory suggests that business cycles are driven by external shocks and market processes that tend toward equilibrium unless disturbed?

Classical and Neoclassical Theories Signup and view all the answers

What is the primary function of the Goods Market in the circular flow model?

To trade consumer goods and services Signup and view all the answers

What is the primary function of fiscal policy during an economic downturn?

To stimulate demand through increased government spending and reduced taxes Signup and view all the answers

What is the term for the fluctuations in economic activity that an economy experiences over a period?

Business Cycles Signup and view all the answers

What is the term for the total economic output at market prices, which is a critical national account aggregate?

GDP Signup and view all the answers

What is the formula for the multiplier in a simple two-sector model, where MPS is the marginal propensity to save?

k = 1 / (1 - MPS) Signup and view all the answers

Which sector in the circular flow model is responsible for producing goods and services, generating revenue and expenditures within the economy?

Firms Signup and view all the answers

What is the primary function of the Financial Market in the circular flow model?

To manage the flow of money, including savings and investments Signup and view all the answers

What is the primary objective of monetary policy?

To stabilize economic activity Signup and view all the answers

Which of the following is NOT a type of market in the circular flow model?

Labor Market Signup and view all the answers

What is the term for the lowest point of economic activity in a business cycle?

Trough Signup and view all the answers

Which of the following is an example of an exogenous factor influencing business cycles?

Natural disasters Signup and view all the answers

What is the primary function of the Foreign Sector in the circular flow model?

To facilitate international trade Signup and view all the answers

What is the term for the movement of money for goods and services in the circular flow model?

Money Flows Signup and view all the answers

Which of the following is a characteristic of an open economy circular flow model?

It includes international trade and transactions Signup and view all the answers

What is the primary function of Households in the circular flow model?

To provide labor and resources Signup and view all the answers

What is the primary objective of the public sector in South Africa?

To manage resources and provide essential services Signup and view all the answers

What can distort market operations and lead to inefficiencies if not carefully managed?

Taxes and subsidies Signup and view all the answers

What is the role of the foreign exchange market?

To facilitate international trade and investments Signup and view all the answers

What does a balance of payments surplus indicate?

The country is exporting more than it imports Signup and view all the answers

What is the primary function of the balance of payments?

To record all economic transactions between residents of a country and the rest of the world Signup and view all the answers

What is the Laffer Curve used to illustrate?

The relationship between tax rates and tax revenue Signup and view all the answers

What is the main challenge facing the public sector?

All of the above Signup and view all the answers

What determines the exchange rates in a managed floating exchange rate system?

Government intervention occasionally Signup and view all the answers

What do policymakers use data from the foreign exchange market and balance of payments to formulate?

Economic strategies Signup and view all the answers

What affects the supply and demand of currencies in the foreign exchange market?

All of the above Signup and view all the answers

What is the primary objective of using a mix of demand-side and supply-side policies in the New Economic Paradigm?

To create a balanced approach to economic stability Signup and view all the answers

Which of the following economic indicators is an example of a lagging indicator?

Unemployment rates Signup and view all the answers

What is the primary challenge facing the public sector in terms of service delivery?

Inadequate needs assessment Signup and view all the answers

What is the primary objective of the Medium-Term Expenditure Framework (MTEF) in the public sector?

To plan and allocate resources over a three-year period Signup and view all the answers

What is the primary purpose of forecasting business cycles?

To mitigate the adverse effects of downturns and capitalize on periods of growth Signup and view all the answers

Which of the following is a characteristic of demand-side policies?

Aim to regulate aggregate demand through fiscal stimuli or monetary adjustments Signup and view all the answers

What is the primary purpose of taxation as a fiscal policy instrument?

To manage economic activity and stabilize the economy Signup and view all the answers

What is the primary objective of the Laffer Curve?

To illustrate the relationship between taxation and economic growth Signup and view all the answers

Which of the following is a characteristic of supply-side policies?

Aim to increase productivity and efficiency through technological advancements Signup and view all the answers

What is the primary purpose of accountability in the public sector?

To promote transparency and accountability Signup and view all the answers

What is the primary function of the firms sector in the open economy circular flow model?

Producing goods and services, generating revenue and expenditures Signup and view all the answers

What is the primary function of the financial market in the open economy circular flow model?

Managing the flow of money, including savings and investments Signup and view all the answers

What is measured by the Gross Domestic Product (GDP)?

The total economic output at market prices Signup and view all the answers

What is the consequence of additional spending in the economy, as captured by the multiplier effect?

Amplified economic activity Signup and view all the answers

Which sector in the open economy circular flow model is involved in trade activities, where exports add to the economic flow and imports lead to outflows of currency?

Foreign Sector Signup and view all the answers

What is the term for the movement of goods and services in the circular flow model?

Real Flow Signup and view all the answers

What is the primary function of the government sector in the open economy circular flow model?

Collecting taxes and injecting spending into the economy Signup and view all the answers

What is the purpose of the goods market in the open economy circular flow model?

Trading consumer goods and services Signup and view all the answers

What is the term for the financial transactions for goods and services in the circular flow model?

Money Flow Signup and view all the answers

What is the primary function of the households sector in the open economy circular flow model?

Providing labor and resources, receiving income used for consumption, savings, and taxes Signup and view all the answers

What is the primary goal of policymakers when using data from the foreign exchange market and balance of payments?

To stabilize the economy and manage inflation Signup and view all the answers

What can lead to shortages or surpluses, depending on whether prices are set below or above market equilibrium?

Administered prices Signup and view all the answers

What determines the exchange rates in a free floating exchange rate system?

Market forces Signup and view all the answers

What does a balance of payments surplus indicate?

A country is exporting more than it imports Signup and view all the answers

What is the term for the comprehensive record of all economic transactions between residents of a country and the rest of the world?

Balance of payments Signup and view all the answers

What can distort market operations and lead to inefficiencies if not carefully managed?

Subsidies and taxes Signup and view all the answers

What is the primary function of the government sector in South Africa?

To manage resources and provide services that are not suitable for private sector delivery Signup and view all the answers

What is the term for the market where currencies are traded?

Foreign exchange market Signup and view all the answers

What can central banks do to stabilize or guide the exchange rate towards desired levels?

All of the above Signup and view all the answers

What affects the supply and demand of currencies in the foreign exchange market?

All of the above Signup and view all the answers

What is the primary objective of the New Economic Paradigm?

To smooth out the volatility in business cycles and achieve stable growth Signup and view all the answers

What is the main difference between demand-side and supply-side policies?

Demand-side policies focus on regulating aggregate demand, while supply-side policies focus on increasing productivity and efficiency Signup and view all the answers

Which economic indicator is used to predict future economic activity?

Leading indicator Signup and view all the answers

What is the primary function of the public sector?

To provide essential services that are not profit-driven Signup and view all the answers

What is the main challenge facing the public sector?

Inefficiency due to lack of clear performance metrics and accountability Signup and view all the answers

What is the purpose of the Medium-Term Expenditure Framework (MTEF)?

To plan and allocate resources over a three-year period Signup and view all the answers

What is the primary objective of fiscal policy?

To achieve economic stability and growth through a mix of demand-side and supply-side policies Signup and view all the answers

What is the purpose of forecasting business cycles?

To prepare for economic fluctuations and mitigate the adverse effects of downturns Signup and view all the answers

What is the main advantage of using econometric models in forecasting?

They provide a more accurate picture of the economy Signup and view all the answers

What is the main purpose of the Laffer Curve?

To illustrate the relationship between taxation and economic growth Signup and view all the answers

What does GNI (Gross National Income) account for?

All income earned by a country's residents, adjusting for income received from abroad Signup and view all the answers

What is the primary purpose of the Multiplier Formula?

To calculate the effect of initial increases in spending on economic output Signup and view all the answers

What is a characteristic of the peak phase of a business cycle?

Economic indicators are at their highest point Signup and view all the answers

What is an example of an exogenous factor influencing business cycles?

Natural disaster Signup and view all the answers

What is the primary purpose of monetary policy?

To stabilize economic activity Signup and view all the answers

What is the formula for the multiplier in a simple two-sector model?

k = 1 / (1 - MPC) Signup and view all the answers

What is the primary goal of fiscal policy during an economic downturn?

To stimulate economic activity Signup and view all the answers

What is the main difference between the Two-Sector Model and the Three and Four-Sector Models?

The inclusion of foreign transactions Signup and view all the answers

What is the purpose of the Three and Four-Sector Models?

To analyze the economy with foreign transactions Signup and view all the answers

What is the primary function of fiscal policy?

To stabilize economic activity Signup and view all the answers

What is the primary function of firms in the circular flow model?

Generating revenue and expenditures Signup and view all the answers

What is the term for the market that trades currencies necessary for international trade?

Foreign Exchange Market Signup and view all the answers

What does GDP measure?

The total economic output at market prices Signup and view all the answers

What is the primary function of the government in the circular flow model?

Collecting taxes and injecting spending Signup and view all the answers

What is the term for the movement of goods and services in the circular flow model?

Real Flows Signup and view all the answers

What is the term for the financial transactions for goods and services in the circular flow model?

Money Flows Signup and view all the answers

What is the primary function of the foreign sector in the circular flow model?

Involving trade activities Signup and view all the answers

What is the term for the market that deals in resources like labor and capital?

Factor Market Signup and view all the answers

What is the primary function of households in the circular flow model?

Providing labor and resources Signup and view all the answers

What is the term for the market that manages the flow of money?

Financial Market Signup and view all the answers

What is the primary focus of the Two-Sector Model in the multiplier effect?

Household and firm interactions Signup and view all the answers

What is the main objective of the New Economic Paradigm?

To smooth out the volatility in business cycles and achieve stable growth Signup and view all the answers

What is the formula for the multiplier in a simple two-sector model?

k = 1 / (1 - MPC) Signup and view all the answers

What is the purpose of forecasting business cycles?

To mitigate the adverse effects of downturns and capitalize on periods of growth Signup and view all the answers

What is the term for the highest point of economic activity in a business cycle?

Peak Signup and view all the answers

What is the primary function of the public sector?

To provide structure and essential services that are not profit-driven Signup and view all the answers

What is the main challenge facing the public sector?

Inefficiency due to lack of competition and accountability Signup and view all the answers

What is the primary goal of fiscal policy during an economic downturn?

Stimulate demand and pull the economy out of a recession Signup and view all the answers

What is the purpose of the Medium-Term Expenditure Framework (MTEF)?

To plan over a three-year period, allowing for more predictable and strategic allocation of resources Signup and view all the answers

What is the term for the fluctuations in economic activity that an economy experiences over a period?

Business cycles Signup and view all the answers

What is the primary objective of fiscal policy?

To regulate aggregate demand through fiscal stimuli or monetary adjustments Signup and view all the answers

What is the primary focus of the Schumpeterian Theory of business cycles?

Technological innovation Signup and view all the answers

What is the main difference between demand-side and supply-side policies?

Demand-side policies focus on stimulating aggregate demand, while supply-side policies focus on increasing productivity and efficiency Signup and view all the answers

What is the term for the total economic output at market prices?

GDP Signup and view all the answers

What is the primary function of monetary policy?

Stabilize economic activity Signup and view all the answers

What is an example of a leading indicator?

Stock market performance Signup and view all the answers

What is the term for the lowest point of economic activity in a business cycle?

Trough Signup and view all the answers

What is the purpose of econometric models in forecasting?

To use complex algorithms and historical data to predict future trends Signup and view all the answers

What type of factors can influence business cycles?

Both exogenous and endogenous factors Signup and view all the answers

What is the main objective of the public sector in South Africa?

To provide essential services like public safety, health, and education Signup and view all the answers

What is the primary goal of government spending in relation to economic growth and stability?

To direct spending towards public goods and services that encourage economic growth and stability Signup and view all the answers

What is the main purpose of the Laffer Curve?

To illustrate the relationship between tax rates and tax revenue Signup and view all the answers

What is the main consequence of information failure in the public sector?

Inefficient outcomes Signup and view all the answers

What is the primary function of the foreign exchange market?

To determine the exchange rates for currencies Signup and view all the answers

What is the definition of the balance of payments?

A record of all economic transactions between residents of a country and the rest of the world Signup and view all the answers

What is the primary consequence of a balance of payments surplus?

A net inflow of money Signup and view all the answers

What is the main difference between a free floating and a managed floating exchange rate system?

The level of government intervention Signup and view all the answers

What can central banks do to stabilize or guide the exchange rate towards desired levels?

Buy or sell currencies directly Signup and view all the answers

What affects the supply and demand of currencies in the foreign exchange market?

All of the above Signup and view all the answers

What do policymakers use data from the foreign exchange market and balance of payments to formulate?

Trade policies and investment strategies Signup and view all the answers

CH SUM : MACRO ECONOMICS

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Questions and Answers

Which sector in the circular flow model provides labor and resources?

What type of market deals in resources like labor and capital?

What is the primary function of the Government sector in the circular flow model?

What is the term for the movement of goods and services in the circular flow model?

What is the primary function of the Foreign Sector in the circular flow model?

What is the term for the financial transactions for goods and services in the circular flow model?

Which market manages the flow of money, including savings and investments?

What is the term for the total economic output at market prices?

Which sector in the circular flow model utilizes labor and resources to produce goods and services?

What type of market trades consumer goods and services?

What is the primary objective of the New Economic Paradigm?

Which of the following is an example of a leading indicator?

What is the main purpose of the public sector?

What is the main challenge facing the public sector?

What is the purpose of the Medium-Term Expenditure Framework (MTEF)?

What is the primary objective of fiscal policy?

What is the main difference between demand-side and supply-side policies?

What is the purpose of forecasting business cycles?

What is the main advantage of using econometric models in forecasting?

What is the purpose of the Laffer Curve?

What does GNI account for?

What is the main difference between the Two-Sector Model and the Three and Four-Sector Models?

What is the formula for the multiplier in a simple two-sector model?

What is the peak of a business cycle?

What is an example of an endogenous factor influencing business cycles?

What is the primary function of the public sector in South Africa?

Which theory suggests that business cycles are driven by changes in aggregate demand?

What does the Laffer Curve illustrate?

What is the primary goal of monetary policy?

What is the main difference between expansion and contraction phases of a business cycle?

What can distort market operations and lead to inefficiencies if not carefully managed?

What determines the exchange rates in a free floating exchange rate system?

What is the role of technological innovation in the Schumpeterian Theory of business cycles?

What is the balance of payments?

What is the goal of fiscal policy during an economic downturn?

What does a balance of payments surplus indicate?

What can central banks do to stabilize or guide the exchange rate towards desired levels?

What affects the supply and demand of currencies in the foreign exchange market?

What is the current account component of the balance of payments?

What do policymakers use data from the foreign exchange market and balance of payments to formulate?

What is the primary function of the Foreign Sector in the circular flow model?

What is the term for the total economic output at market prices?

What is the purpose of the Financial Market in the circular flow model?

What is the term for the movement of money for goods and services in the circular flow model?

Which sector in the circular flow model generates revenue and expenditures?

What is the term for the trade of consumer goods and services in the circular flow model?

What is the primary function of Households in the circular flow model?

What is the term for the market that deals in resources like labor and capital?

What is the primary function of the Government in the circular flow model?

What is the term for the movement of goods and services in the circular flow model?

What is the purpose of the multiplier effect in economics?

What is the formula for the multiplier in a simple two-sector model?

What is the primary function of the public sector in South Africa?

What is the primary characteristic of the contraction phase of a business cycle?

What is the Laffer Curve used to illustrate?

What is an example of an exogenous factor influencing business cycles?

What is the primary function of fiscal policy during an economic downturn?

What is the balance of payments?

What determines the exchange rates in a managed floating exchange rate system?

Which theory suggests that business cycles are driven by changes in aggregate demand?

What does GNI account for?

What is the current account component of the balance of payments?

What is the primary function of monetary policy?

What can distort market operations and lead to inefficiencies if not carefully managed?

What is the primary objective of the New Economic Paradigm?

What is the purpose of central banks intervening in the forex market?

Which type of indicator confirms trends that are already in process?

What is the peak of a business cycle?

What is the main difference between the Two-Sector Model and the Three and Four-Sector Models?

What is the primary focus of supply-side policies?

What does a balance of payments surplus indicate?

What affects the supply and demand of currencies in the foreign exchange market?

What is the main challenge facing the public sector?

What is the primary objective of policymakers when formulating economic policies using data from the foreign exchange market and balance of payments?

What is the purpose of forecasting business cycles?

What is the primary function of State-Owned Enterprises (SOEs)?