Term 1 Test

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What is the primary function of the foreign sector in an open economy?

To collect taxes and inject spending into the economy

To facilitate trade activities and manage exports and imports (correct)

To provide labor and resources to firms

To manage the flow of money and savings

What is the term used to describe the movement of goods and services in an open economy?

Goods Flows

Financial Flows

Money Flows

Real Flows (correct)

What is the primary purpose of the goods market?

To trade consumer goods and services (correct)

To facilitate international trade

To manage the flow of money and savings

To deal in resources like labor and capital

What does the GDP (Gross Domestic Product) measure?

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

What is the primary function of firms in an open economy?

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

What is the primary purpose of the financial market?

To manage the flow of money, including savings and investments 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 primary function of the government in an open economy?

To collect taxes and inject spending into the economy through public services and infrastructure Signup and view all the answers

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

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

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

Peak Signup and view all the answers

What does the circular flow model illustrate?

The movement of money and goods across different sectors of the economy Signup and view all the answers

What is the primary function of households in an open economy?

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

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

It leads to bursts of activity followed by periods of adjustment Signup and view all the answers

What is the term used to describe the financial transactions for goods and services in an open economy?

Money Flows Signup and view all the answers

What is the purpose of monetary policy in stabilizing economic activity?

To utilize tools such as interest rates and control of money supply Signup and view all the answers

What is the phase of the business cycle marked by an increase in economic activities?

Expansion Signup and view all the answers

What is the primary factor that drives business cycles according to the Keynesian Theory?

Changes in aggregate demand Signup and view all the answers

What is the purpose of fiscal policy in times of economic downturn?

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

What is the phase of the business cycle that follows the peak and can lead to a recession if it is prolonged and severe?

Contraction Signup and view all the answers

What is the lowest point of a business cycle, marking the end of a recession before a new expansion begins?

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

Lagging Indicator Signup and view all the answers

What type of forecasting technique predicts future behavior based on historical data and trends?

Extrapolation Signup and view all the answers

What is the main role of the national government?

Handling national affairs like defense and education Signup and view all the answers

What is a major challenge facing the public sector?

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

What is the main objective of the public sector's pricing policy?

To fulfill social responsibilities rather than maximizing revenue Signup and view all the answers

What is the main 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 one of the main objectives of the public sector?

To promote economic equity through progressive taxation and social welfare programs Signup and view all the answers

What is a fiscal policy instrument used to manage economic activity?

Taxation Signup and view all the answers

What is a major problem with state-owned enterprises?

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

What is the primary goal of directing government spending towards public goods and services?

To encourage economic growth and stability Signup and view all the answers

What illustrates the relationship between tax rates and tax revenue?

The Laffer Curve Signup and view all the answers

What can lead to shortages or surpluses in a market?

Administered Prices Signup and view all the answers

What is the role of the public sector in South Africa?

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

What is the primary function of the foreign exchange market?

To establish the value of currencies Signup and view all the answers

What affects the supply and demand of currencies in the forex market?

All of the above Signup and view all the answers

What is the purpose of central bank intervention in the forex market?

To stabilize the currency's value Signup and view all the answers

What records all economic transactions between a country and the rest of the world?

Balance of Payments (BoP) Signup and view all the answers

What does a BoP surplus indicate?

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

What do policymakers use data from the forex market and BoP to formulate?

Economic strategies Signup and view all the answers

What is the primary difference between Gross Domestic Product (GDP) and Gross National Income (GNI)?

GDP accounts for income earned by foreigners, while GNI accounts for income earned by residents Signup and view all the answers

What is the main purpose of the Multiplier Effect in economics?

To calculate the impact of initial spending on overall economic output Signup and view all the answers

What is the name of the model that focuses on household and firm interactions in the Multiplier Effect?

Two-Sector Model Signup and view all the answers

What is the phase of the business cycle characterized by a decline in economic activity?

Contraction 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 is the primary tool used in monetary policy to stabilize economic activity?

Interest rates Signup and view all the answers

What is the term used to describe the external influences that affect business cycles?

Exogenous Factors Signup and view all the answers

What is the term used to describe the lowest point of a business cycle?

Trough Signup and view all the answers

What is the primary purpose of fiscal policy in times of economic downturn?

To stimulate economic activity Signup and view all the answers

What is the term used to describe the fluctuations in economic activity that an economy experiences over time?

Business Cycles Signup and view all the answers

In an open economy, what is the primary purpose of the government?

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

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

Factor Market Signup and view all the answers

What is the term used to describe the flow of goods and services in an open economy?

Real Flows Signup and view all the answers

What is measured by the GDP in an open economy?

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

What is the primary sector that provides labor and resources in an open economy?

Households Signup and view all the answers

What type of market manages the flow of money?

Financial Market Signup and view all the answers

What is the primary function of the foreign sector in an open economy?

To involve trade activities Signup and view all the answers

What is the term used to describe the financial transactions for goods and services?

Money Flows Signup and view all the answers

What is the primary purpose of the circular flow model?

To illustrate the movement of money and goods Signup and view all the answers

What is the term used to describe the market that trades consumer goods and services?

Goods Market Signup and view all the answers

What is the primary goal of directing government spending towards public goods and services?

To stabilize the economy and promote growth Signup and view all the answers

What illustrates the relationship between tax rates and tax revenue?

Laffer Curve Signup and view all the answers

What can distort market operations and lead to inefficiencies?

All of the above Signup and view all the answers

What determines the exchange rates for currencies?

Supply and demand of currencies Signup and view all the answers

What is the purpose of central bank intervention in the forex market?

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

What records all economic transactions between a country and the rest of the world?

Balance of Payments Signup and view all the answers

What does a BoP surplus indicate?

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

What can lead to shortages or surpluses in a market?

Administered prices Signup and view all the answers

What is the primary function of the foreign exchange market?

To facilitate international trade and investments 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 affects the supply and demand of currencies in the forex market?

All of the above Signup and view all the answers

What type of indicator predicts future economic activity?

Leading indicator Signup and view all the answers

What is the main role of the national government?

To handle national affairs like defense and education Signup and view all the answers

What is a major challenge facing the public sector?

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

What is the primary goal of the public sector's pricing policy?

To fulfill social responsibilities Signup and view all the answers

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

To plan and manage the national budget Signup and view all the answers

What is a fiscal policy instrument used to manage economic activity?

Taxation Signup and view all the answers

What is a major problem with state-owned enterprises?

Lack of competition Signup and view all the answers

What illustrates the relationship between tax rates and tax revenue?

Laffer Curve Signup and view all the answers

What is the primary goal of directing government spending towards public goods and services?

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

What is the primary goal of directing government spending towards public goods and services?

To encourage economic growth and stability Signup and view all the answers

What is the term used to describe the relationship between tax rates and tax revenue?

Laffer Curve Signup and view all the answers

What is a major challenge facing the public sector?

Efficiency and accountability Signup and view all the answers

What is the purpose of the foreign exchange market?

To facilitate international trade Signup and view all the answers

What is the Balance of Payments (BoP)?

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

What is the effect of a BoP surplus?

A net inflow of money Signup and view all the answers

What is the purpose of central bank intervention in the forex market?

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

What can lead to shortages or surpluses in a market?

Price controls Signup and view all the answers

What is the primary role of the public 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 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 Signup and view all the answers

What is the main role of the provincial governments in the public sector?

To manage regional issues Signup and view all the answers

What is the main challenge facing the public sector in terms of efficiency?

Lack of clear performance metrics Signup and view all the answers

What is the primary objective of the public sector's pricing policy?

To fulfill social responsibilities Signup and view all the answers

What is the Medium-Term Expenditure Framework (MTEF) used for?

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

What is the primary objective of fiscal policy in times of economic downturn?

To stimulate economic growth Signup and view all the answers

What is a major problem facing state-owned enterprises?

Lack of competition Signup and view all the answers

What type of indicators confirm trends that are already in process?

Lagging indicators Signup and view all the answers

What is the primary objective of demand-side policies?

To regulate aggregate demand Signup and view all the answers

What is the primary role of the national government in the public sector?

To handle national affairs Signup and view all the answers

What is the main purpose of the Multiplier Effect in economics?

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

What is the name of the model that focuses on household and firm interactions in the Multiplier Effect?

Two-Sector Model Signup and view all the answers

What is the term used to describe the phase of the business cycle characterized by a decline in economic activity?

Contraction 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 is the primary tool used in monetary policy to stabilize economic activity?

Interest Rates Signup and view all the answers

What is the term used to describe the external influences that affect business cycles?

Exogenous Factors Signup and view all the answers

What is the term used to describe the lowest point of a business cycle?

Trough Signup and view all the answers

What is the primary purpose of fiscal policy in times of economic downturn?

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

What is the term used to describe the fluctuations in economic activity that an economy experiences over time?

Business Cycles Signup and view all the answers

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

k = 1 / MPC Signup and view all the answers

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

To illustrate the economic activities and interactions among various sectors Signup and view all the answers

Which market involves the trading of currencies necessary for international trade?

Foreign Exchange Market Signup and view all the answers

What is the term used to describe the movement of money and goods across different sectors of the economy?

Money Flows Signup and view all the answers

Which sector collects taxes and injects spending into the economy?

Government Signup and view all the answers

What is the purpose of the multiplier effect in economics?

To capture the extent to which additional spending can amplify economic activity Signup and view all the answers

What is the term used to describe the total economic output at market prices?

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

Which sector involves 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 primary function of households in an open economy?

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

What is the purpose of the financial market in an open economy?

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

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

To highlight the interactions between different sectors of the economy. Signup and view all the answers

Which market facilitates the trading of currencies necessary for international trade?

Foreign Exchange Market Signup and view all the answers

What is the term used to describe the movement of money and goods across different sectors of the economy?

Money Flows Signup and view all the answers

Which of the following sectors injects spending into the economy through public services and infrastructure?

Government Signup and view all the answers

What is the primary purpose of measuring the Gross Domestic Product (GDP)?

To measure the economic performance of a country. Signup and view all the answers

What is the relationship between the goods market and the factor market?

The goods market and the factor market are interdependent markets. Signup and view all the answers

Which of the following is NOT a component of the circular flow model?

Central Bank Signup and view all the answers

What is the primary purpose of the financial market?

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

Which of the following is an example of a real flow?

Production of goods and services. Signup and view all the answers

What is the primary purpose of the multiplier effect?

To capture the extent to which additional spending can amplify economic activity. 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 type of indicator predicts future economic activity by moving ahead of the business cycle?

Leading Indicators Signup and view all the answers

What is the primary challenge facing the public sector?

Efficiency Challenges Signup and view all the answers

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

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

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

To regulate aggregate demand Signup and view all the answers

What is the primary problem with state-owned enterprises?

Lack of competition and accountability Signup and view all the answers

What is the primary role of the national government?

To handle national affairs like defense and education Signup and view all the answers

What is the primary goal of the public sector's pricing policy?

To fulfill social responsibilities Signup and view all the answers

What is the primary objective of the public sector?

To provide structure and essential services Signup and view all the answers

What is the primary purpose of forecasting business cycles?

To predict future economic activity Signup and view all the answers

What does the Gross National Income (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 purpose of the Multiplier Effect in economics?

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

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

The level of complexity in the spending and saving behaviors Signup and view all the answers

What is the term used to describe the point of highest economic activity in a business cycle?

Peak Signup and view all the answers

What is the primary purpose of fiscal policy in times of economic downturn?

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

What is the term used to describe the fluctuations in economic activity that an economy experiences over time?

Business Cycles Signup and view all the answers

What is the purpose of monetary policy in stabilizing economic activity?

To stabilize economic activity through interest rates and money supply Signup and view all the answers

What is the term used to describe the internal influences that affect business cycles?

Endogenous factors Signup and view all the answers

What is the primary purpose of the Two-Sector Model in the Multiplier Effect?

To focus on household and firm interactions Signup and view all the answers

What is the term used to describe the phase of the business cycle that follows the peak and can lead to a recession if it is prolonged and severe?

Contraction Signup and view all the answers

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

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

What is the term used to describe the relationship between tax rates and tax revenue?

Laffer Curve Signup and view all the answers

What can lead to shortages or surpluses in a market?

Price controls Signup and view all the answers

What is the primary function of the foreign exchange market?

To facilitate international trade Signup and view all the answers

What is the purpose of central bank intervention in the forex market?

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

What records all economic transactions between a country and the rest of the world?

Balance of Payments Signup and view all the answers

What does a BoP surplus indicate?

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

What do policymakers use data from the forex market and BoP to formulate?

Economic strategies Signup and view all the answers

What is the primary goal of directing government spending towards public goods and services?

To encourage economic stability Signup and view all the answers

What is one of the main objectives of the public sector's pricing policy?

To encourage economic efficiency Signup and view all the answers

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

Managing resources and providing services efficiently Signup and view all the answers

What is the primary goal 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 NOT a function of the foreign exchange market?

Managing the balance of payments Signup and view all the answers

What is the primary consequence of a BoP surplus?

Net inflow of money Signup and view all the answers

Which of the following indicators is used to predict future economic activity?

Leading Indicators Signup and view all the answers

Which of the following is a consequence of administered prices?

Shortages or surpluses Signup and view all the answers

What is the primary role of the national government in the public sector?

To handle national affairs such as defense and education Signup and view all the answers

What is the main challenge facing the public sector in terms of provisioning?

Lack of clear performance metrics Signup and view all the answers

What is the primary objective of directing government spending towards public goods and services?

Promoting economic growth and stability Signup and view all the answers

What is the primary objective of the public sector's pricing policy?

To fulfill social responsibilities Signup and view all the answers

What is the primary factor that influences exchange rates in a free-floating exchange rate system?

Market forces Signup and view all the answers

What is the Medium-Term Expenditure Framework (MTEF) used for?

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

What is the primary role of the capital account in the balance of payments?

Monitoring capital transactions Signup and view all the answers

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

Inefficient outcomes Signup and view all the answers

What is the primary problem with state-owned enterprises?

Lack of competition Signup and view all the answers

What is the primary purpose of central bank intervention in the forex market?

To stabilize the exchange rate Signup and view all the answers

What is the main objective of fiscal policy in times of economic downturn?

To stimulate economic activity Signup and view all the answers

What is the primary role of the financial account in the balance of payments?

Tracking investments in financial instruments Signup and view all the answers

What is the term used to describe the relationship between tax rates and tax revenue?

Laffer Curve Signup and view all the answers

What is the primary role of the public sector in an economy?

To provide essential services Signup and view all the answers

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

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

What is the significance of the multiplier effect in the context of the circular flow model?

It captures the extent to which additional spending can amplify economic activity Signup and view all the answers

What is the primary purpose of the government sector in the circular flow model?

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

What is the primary function of the foreign sector in the context of 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 significance of the goods market in the context of the circular flow model?

It trades consumer goods and services Signup and view all the answers

What is the primary purpose of the factor market in the context of the circular flow model?

To deal in resources like labor and capital Signup and view all the answers

What is the significance of the foreign exchange market in the context of the circular flow model?

It handles the trading of currencies necessary for international trade Signup and view all the answers

What is the primary purpose of the circular flow model?

To illustrate the movement of money and goods across different sectors of the economy Signup and view all the answers

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

To provide labor and resources to firms Signup and view all the answers

What is the primary purpose of the firms sector 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 purpose of the Three and Four-Sector Models in the Multiplier Effect?

To include government and foreign transactions in the spending and saving behaviors Signup and view all the answers

Which of the following is a characteristic of the contraction phase of a business cycle?

Decline in economic indicators and reduction in workforce Signup and view all the answers

What is the primary difference between the Classical and Neoclassical Theories of business cycles?

The emphasis on external shocks versus normal market processes Signup and view all the answers

What is the primary purpose of fiscal policy in times of economic boom?

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

What is the term used to describe the highest point of economic activity in a business cycle?

Peak Signup and view all the answers

What is the primary factor that drives business cycles according to the Schumpeterian Theory?

Technological innovation and entrepreneurship Signup and view all the answers

What is the primary purpose of the Multiplier Effect in economics?

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

What is the primary difference between the Keynesian Theory and the Classical and Neoclassical Theories of business cycles?

The focus on aggregate demand versus supply-side factors Signup and view all the answers

What is the term used to describe the external influences that affect business cycles?

Exogenous factors Signup and view all the answers

What is the primary purpose of monetary policy in stabilizing economic activity?

To control the money supply and interest rates Signup and view all the answers

Which sector of the economy generates revenue through the production of goods and services?

Firms Signup and view all the answers

What is the primary function of the financial market in an open economy?

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

Which of the following national account aggregates measures the total economic output at market prices?

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

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

To highlight the interactions between households, firms, government, and foreign sector Signup and view all the answers

Which market facilitates the trading of currencies necessary for international trade?

Foreign Exchange Market Signup and view all the answers

What is the primary function of the government in an open economy?

To inject spending into the economy through public services and infrastructure Signup and view all the answers

What is the term used to describe the movement of money and goods across different sectors of the economy?

Circular Flow Signup and view all the answers

Which of the following sectors is responsible for collecting taxes and injecting spending into the economy?

Government Signup and view all the answers

What is the primary purpose of the goods market in an open economy?

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

What is the term used to describe the extent to which additional spending can amplify economic activity?

Multiplier Effect Signup and view all the answers

What is the main purpose of directing government spending towards public goods and services?

To encourage economic growth and stability Signup and view all the answers

Which of the following is a characteristic of a managed floating exchange rate system?

The government intervenes occasionally to stabilize the currency's value Signup and view all the answers

What is the primary purpose of the Balance of Payments (BoP)?

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

What is the result of a BoP surplus?

A net inflow of money into the country Signup and view all the answers

What is the primary function of the foreign exchange market?

To facilitate international trade by establishing the value of currencies Signup and view all the answers

What can cause appreciations or depreciations in a currency?

Changes in interest rates and economic stability Signup and view all the answers

What is the role of the public sector in South Africa?

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

What is the Laffer Curve illustrating?

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

What can distort market operations and lead to inefficiencies?

Subsidies and taxes, if not carefully managed Signup and view all the answers

What is the main difference between Basic Prices, Factor Cost, and Market Prices?

Method of categorizing prices Signup and view all the answers

What is the multiplier effect used to explain?

Increases in spending leading to a larger increase in economic output Signup and view all the answers

What do policymakers use data from the forex market and BoP to formulate?

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

What is the purpose of the Two-Sector Model in economics?

To explain the multiplier effect Signup and view all the answers

What is the primary factor that drives business cycles according to the Classical and Neoclassical Theories?

External shocks and normal market processes Signup and view all the answers

What is the primary tool used in monetary policy to stabilize economic activity?

Interest rates and control of money supply Signup and view all the answers

What is the term used to describe the highest point of economic activity in a business cycle?

Peak Signup and view all the answers

What is the primary purpose of fiscal policy in times of economic downturn?

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

What is the term used to describe the fluctuations in economic activity that an economy experiences over time?

Business cycle Signup and view all the answers

What is the primary difference between GNI and GDP?

GNI accounts for income earned abroad, while GDP does not 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 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 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?

Lack of clear performance metrics and accountability Signup and view all the answers

What is the primary objective 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 a Lagging Indicator in forecasting business cycles?

A confirmation of trends that are already in process Signup and view all the answers

What is the primary role of the national government?

To handle national affairs like defense and education Signup and view all the answers

What is a major problem with State-Owned Enterprises (SOEs)?

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

What is the main objective of fiscal policy?

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

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

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

What is the main goal of extrapolation as a forecasting technique?

To predict future behavior based on historical data and trends Signup and view all the answers

Term 1 Test

Podcast Beta

Questions and Answers

What is the primary function of the foreign sector in an open economy?

What is the term used to describe the movement of goods and services in an open economy?

What is the primary purpose of the goods market?

What does the GDP (Gross Domestic Product) measure?

What is the primary function of firms in an open economy?

What is the primary purpose of the financial market?

What does GNI account for?

What is the primary function of the government in an open economy?

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

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

What does the circular flow model illustrate?

What is the primary function of households in an open economy?

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

What is the term used to describe the financial transactions for goods and services in an open economy?

What is the purpose of monetary policy in stabilizing economic activity?

What is the phase of the business cycle marked by an increase in economic activities?

What is the primary factor that drives business cycles according to the Keynesian Theory?

What is the purpose of fiscal policy in times of economic downturn?

What is the phase of the business cycle that follows the peak and can lead to a recession if it is prolonged and severe?

What is the lowest point of a business cycle, marking the end of a recession before a new expansion begins?

What is the main objective of the New Economic Paradigm?

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

What type of forecasting technique predicts future behavior based on historical data and trends?

What is the main role of the national government?

What is a major challenge facing the public sector?

What is the main objective of the public sector's pricing policy?

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

What is one of the main objectives of the public sector?

What is a fiscal policy instrument used to manage economic activity?

What is a major problem with state-owned enterprises?

What is the primary goal of directing government spending towards public goods and services?

What illustrates the relationship between tax rates and tax revenue?

What can lead to shortages or surpluses in a market?

What is the role of the public sector in South Africa?

What is the primary function of the foreign exchange market?

What affects the supply and demand of currencies in the forex market?

What is the purpose of central bank intervention in the forex market?

What records all economic transactions between a country and the rest of the world?

What does a BoP surplus indicate?

What do policymakers use data from the forex market and BoP to formulate?

What is the primary difference between Gross Domestic Product (GDP) and Gross National Income (GNI)?

What is the main purpose of the Multiplier Effect in economics?

What is the name of the model that focuses on household and firm interactions in the Multiplier Effect?

What is the phase of the business cycle characterized by a decline in economic activity?

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

What is the primary tool used in monetary policy to stabilize economic activity?

What is the term used to describe the external influences that affect business cycles?

What is the term used to describe the lowest point of a business cycle?

What is the primary purpose of fiscal policy in times of economic downturn?

What is the term used to describe the fluctuations in economic activity that an economy experiences over time?

In an open economy, what is the primary purpose of the government?

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

What is the term used to describe the flow of goods and services in an open economy?

What is measured by the GDP in an open economy?

What is the primary sector that provides labor and resources in an open economy?

What type of market manages the flow of money?

What is the primary function of the foreign sector in an open economy?

What is the term used to describe the financial transactions for goods and services?

What is the primary purpose of the circular flow model?

What is the term used to describe the market that trades consumer goods and services?

What is the primary goal of directing government spending towards public goods and services?

What illustrates the relationship between tax rates and tax revenue?

What can distort market operations and lead to inefficiencies?

What determines the exchange rates for currencies?

What is the purpose of central bank intervention in the forex market?

What records all economic transactions between a country and the rest of the world?

What does a BoP surplus indicate?

What can lead to shortages or surpluses in a market?

What is the primary function of the foreign exchange market?

What is the primary objective of the New Economic Paradigm?

What affects the supply and demand of currencies in the forex market?

What type of indicator predicts future economic activity?

What is the main role of the national government?

What is a major challenge facing the public sector?

What is the primary goal of the public sector's pricing policy?

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

What is a fiscal policy instrument used to manage economic activity?