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Questions and Answers

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?

<p>The total economic output at market prices (D)</p> Signup and view all the answers

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

<p>To utilize labor and resources to produce goods and services (D)</p> Signup and view all the answers

What is the primary purpose of the financial market?

<p>To manage the flow of money, including savings and investments (A)</p> Signup and view all the answers

What does GNI account for?

<p>All income earned by a country's residents, adjusting for income received from abroad (D)</p> Signup and view all the answers

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

<p>To collect taxes and inject spending into the economy through public services and infrastructure (D)</p> Signup and view all the answers

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

<p>k = 1 / (1 - MPC) (C)</p> Signup and view all the answers

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

<p>Peak (C)</p> Signup and view all the answers

What does the circular flow model illustrate?

<p>The movement of money and goods across different sectors of the economy (C)</p> Signup and view all the answers

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

<p>To provide labor and resources, receiving income used for consumption, savings, and taxes (D)</p> Signup and view all the answers

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

<p>It leads to bursts of activity followed by periods of adjustment (B)</p> Signup and view all the answers

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

<p>Money Flows (C)</p> Signup and view all the answers

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

<p>To utilize tools such as interest rates and control of money supply (B)</p> Signup and view all the answers

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

<p>Expansion (C)</p> Signup and view all the answers

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

<p>Changes in aggregate demand (D)</p> Signup and view all the answers

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

<p>To increase government spending and reduce taxes (D)</p> 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?

<p>Contraction (A)</p> 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?

<p>Trough (A)</p> Signup and view all the answers

What is the main objective of the New Economic Paradigm?

<p>To smooth out the volatility in business cycles and achieve stable growth (B)</p> Signup and view all the answers

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

<p>Lagging Indicator (D)</p> Signup and view all the answers

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

<p>Extrapolation (A)</p> Signup and view all the answers

What is the main role of the national government?

<p>Handling national affairs like defense and education (B)</p> Signup and view all the answers

What is a major challenge facing the public sector?

<p>Inefficiency due to lack of clear performance metrics and accountability (D)</p> Signup and view all the answers

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

<p>To fulfill social responsibilities rather than maximizing revenue (D)</p> Signup and view all the answers

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

<p>To plan over a three-year period, allowing for more predictable and strategic allocation of resources (B)</p> Signup and view all the answers

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

<p>To promote economic equity through progressive taxation and social welfare programs (D)</p> Signup and view all the answers

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

<p>Taxation (C)</p> Signup and view all the answers

What is a major problem with state-owned enterprises?

<p>Inefficiency due to lack of competition and accountability (A)</p> Signup and view all the answers

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

<p>To encourage economic growth and stability (B)</p> Signup and view all the answers

What illustrates the relationship between tax rates and tax revenue?

<p>The Laffer Curve (C)</p> Signup and view all the answers

What can lead to shortages or surpluses in a market?

<p>Administered Prices (A)</p> Signup and view all the answers

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

<p>To manage resources and provide essential services (D)</p> Signup and view all the answers

What is the primary function of the foreign exchange market?

<p>To establish the value of currencies (A)</p> Signup and view all the answers

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

<p>All of the above (D)</p> Signup and view all the answers

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

<p>To stabilize the currency's value (D)</p> Signup and view all the answers

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

<p>Balance of Payments (BoP) (D)</p> Signup and view all the answers

What does a BoP surplus indicate?

<p>That the country is exporting more than it imports (A)</p> Signup and view all the answers

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

<p>Economic strategies (C)</p> Signup and view all the answers

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

<p>GDP accounts for income earned by foreigners, while GNI accounts for income earned by residents (A)</p> Signup and view all the answers

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

<p>To calculate the impact of initial spending on overall economic output (D)</p> Signup and view all the answers

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

<p>Two-Sector Model (D)</p> Signup and view all the answers

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

<p>Contraction (A)</p> Signup and view all the answers

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

<p>Keynesian Theory (A)</p> Signup and view all the answers

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

<p>Interest rates (C)</p> Signup and view all the answers

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

<p>Exogenous Factors (A)</p> Signup and view all the answers

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

<p>Trough (D)</p> Signup and view all the answers

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

<p>To stimulate economic activity (D)</p> Signup and view all the answers

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

<p>Business Cycles (C)</p> Signup and view all the answers

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

<p>To collect taxes and inject spending into the economy (B)</p> Signup and view all the answers

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

<p>Factor Market (A)</p> Signup and view all the answers

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

<p>Real Flows (B)</p> Signup and view all the answers

What is measured by the GDP in an open economy?

<p>The total economic output at market prices (C)</p> Signup and view all the answers

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

<p>Households (B)</p> Signup and view all the answers

What type of market manages the flow of money?

<p>Financial Market (C)</p> Signup and view all the answers

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

<p>To involve trade activities (A)</p> Signup and view all the answers

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

<p>Money Flows (D)</p> Signup and view all the answers

What is the primary purpose of the circular flow model?

<p>To illustrate the movement of money and goods (C)</p> Signup and view all the answers

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

<p>Goods Market (D)</p> Signup and view all the answers

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

<p>To stabilize the economy and promote growth (A)</p> Signup and view all the answers

What illustrates the relationship between tax rates and tax revenue?

<p>Laffer Curve (D)</p> Signup and view all the answers

What can distort market operations and lead to inefficiencies?

<p>All of the above (D)</p> Signup and view all the answers

What determines the exchange rates for currencies?

<p>Supply and demand of currencies (A)</p> Signup and view all the answers

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

<p>To stabilize or guide the exchange rate towards desired levels (C)</p> Signup and view all the answers

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

<p>Balance of Payments (D)</p> Signup and view all the answers

What does a BoP surplus indicate?

<p>A country is exporting more than it imports (D)</p> Signup and view all the answers

What can lead to shortages or surpluses in a market?

<p>Administered prices (C)</p> Signup and view all the answers

What is the primary function of the foreign exchange market?

<p>To facilitate international trade and investments (B)</p> Signup and view all the answers

What is the primary objective of the New Economic Paradigm?

<p>To smooth out the volatility in business cycles and achieve stable growth (D)</p> Signup and view all the answers

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

<p>All of the above (D)</p> Signup and view all the answers

What type of indicator predicts future economic activity?

<p>Leading indicator (A)</p> Signup and view all the answers

What is the main role of the national government?

<p>To handle national affairs like defense and education (D)</p> Signup and view all the answers

What is a major challenge facing the public sector?

<p>Inefficiency due to lack of clear performance metrics (A)</p> Signup and view all the answers

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

<p>To fulfill social responsibilities (C)</p> Signup and view all the answers

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

<p>To plan and manage the national budget (B)</p> Signup and view all the answers

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

<p>Taxation (A)</p> Signup and view all the answers

What is a major problem with state-owned enterprises?

<p>Lack of competition (A)</p> Signup and view all the answers

What illustrates the relationship between tax rates and tax revenue?

<p>Laffer Curve (C)</p> Signup and view all the answers

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

<p>To provide essential services that are not profit-driven (B)</p> Signup and view all the answers

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

<p>To encourage economic growth and stability (C)</p> Signup and view all the answers

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

<p>Laffer Curve (A)</p> Signup and view all the answers

What is a major challenge facing the public sector?

<p>Efficiency and accountability (D)</p> Signup and view all the answers

What is the purpose of the foreign exchange market?

<p>To facilitate international trade (B)</p> Signup and view all the answers

What is the Balance of Payments (BoP)?

<p>A comprehensive record of all economic transactions between a country and the rest of the world (C)</p> Signup and view all the answers

What is the effect of a BoP surplus?

<p>A net inflow of money (D)</p> Signup and view all the answers

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

<p>To stabilize or guide the exchange rate towards desired levels (C)</p> Signup and view all the answers

What can lead to shortages or surpluses in a market?

<p>Price controls (A)</p> Signup and view all the answers

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

<p>To manage resources and provide services that are not suitable for private sector delivery (A)</p> Signup and view all the answers

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

<p>Subsidies and taxes (D)</p> Signup and view all the answers

What is the primary objective of the New Economic Paradigm?

<p>To smooth out the volatility in business cycles (D)</p> Signup and view all the answers

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

<p>To manage regional issues (B)</p> Signup and view all the answers

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

<p>Lack of clear performance metrics (D)</p> Signup and view all the answers

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

<p>To fulfill social responsibilities (D)</p> Signup and view all the answers

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

<p>To allocate resources over a three-year period (B)</p> Signup and view all the answers

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

<p>To stimulate economic growth (A)</p> Signup and view all the answers

What is a major problem facing state-owned enterprises?

<p>Lack of competition (A)</p> Signup and view all the answers

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

<p>Lagging indicators (A)</p> Signup and view all the answers

What is the primary objective of demand-side policies?

<p>To regulate aggregate demand (B)</p> Signup and view all the answers

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

<p>To handle national affairs (A)</p> Signup and view all the answers

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

<p>To demonstrate how initial increases in spending lead to a more significant overall increase in economic output (C)</p> Signup and view all the answers

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

<p>Two-Sector Model (D)</p> 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?

<p>Contraction (B)</p> Signup and view all the answers

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

<p>Keynesian Theory (D)</p> Signup and view all the answers

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

<p>Interest Rates (D)</p> Signup and view all the answers

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

<p>Exogenous Factors (B)</p> Signup and view all the answers

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

<p>Trough (C)</p> Signup and view all the answers

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

<p>To stimulate demand and pull the economy out of a recession (C)</p> Signup and view all the answers

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

<p>Business Cycles (D)</p> Signup and view all the answers

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

<p>k = 1 / MPC (B)</p> Signup and view all the answers

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

<p>To illustrate the economic activities and interactions among various sectors (B)</p> Signup and view all the answers

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

<p>Foreign Exchange Market (A)</p> 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?

<p>Money Flows (A)</p> Signup and view all the answers

Which sector collects taxes and injects spending into the economy?

<p>Government (A)</p> Signup and view all the answers

What is the purpose of the multiplier effect in economics?

<p>To capture the extent to which additional spending can amplify economic activity (D)</p> Signup and view all the answers

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

<p>Gross Domestic Product (GDP) (C)</p> 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?

<p>Foreign Sector (B)</p> Signup and view all the answers

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

<p>To provide labor and resources, receiving income used for consumption, savings, and taxes (C)</p> Signup and view all the answers

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

<p>To manage the flow of money, including savings and investments (A)</p> Signup and view all the answers

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

<p>To highlight the interactions between different sectors of the economy. (C)</p> Signup and view all the answers

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

<p>Foreign Exchange Market (B)</p> 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?

<p>Money Flows (A)</p> Signup and view all the answers

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

<p>Government (B)</p> Signup and view all the answers

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

<p>To measure the economic performance of a country. (D)</p> Signup and view all the answers

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

<p>The goods market and the factor market are interdependent markets. (B)</p> Signup and view all the answers

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

<p>Central Bank (A)</p> Signup and view all the answers

What is the primary purpose of the financial market?

<p>To manage the flow of money, including savings and investments. (D)</p> Signup and view all the answers

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

<p>Production of goods and services. (B)</p> Signup and view all the answers

What is the primary purpose of the multiplier effect?

<p>To capture the extent to which additional spending can amplify economic activity. (B)</p> Signup and view all the answers

What is the primary objective of the New Economic Paradigm?

<p>To smooth out the volatility in business cycles and achieve stable growth (C)</p> Signup and view all the answers

What type of indicator predicts future economic activity by moving ahead of the business cycle?

<p>Leading Indicators (B)</p> Signup and view all the answers

What is the primary challenge facing the public sector?

<p>Efficiency Challenges (A)</p> Signup and view all the answers

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

<p>To allocate resources over a three-year period (D)</p> Signup and view all the answers

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

<p>To regulate aggregate demand (C)</p> Signup and view all the answers

What is the primary problem with state-owned enterprises?

<p>Lack of competition and accountability (D)</p> Signup and view all the answers

What is the primary role of the national government?

<p>To handle national affairs like defense and education (A)</p> Signup and view all the answers

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

<p>To fulfill social responsibilities (B)</p> Signup and view all the answers

What is the primary objective of the public sector?

<p>To provide structure and essential services (B)</p> Signup and view all the answers

What is the primary purpose of forecasting business cycles?

<p>To predict future economic activity (D)</p> Signup and view all the answers

What does the Gross National Income (GNI) account for?

<p>All income earned by a country's residents, adjusting for income received from abroad (D)</p> Signup and view all the answers

What is the purpose of the Multiplier Effect in economics?

<p>To demonstrate how initial increases in spending lead to a more significant overall increase in economic output (A)</p> Signup and view all the answers

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

<p>The level of complexity in the spending and saving behaviors (B)</p> Signup and view all the answers

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

<p>Peak (A)</p> Signup and view all the answers

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

<p>To increase government spending and reduce taxes (D)</p> Signup and view all the answers

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

<p>Business Cycles (A)</p> Signup and view all the answers

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

<p>To stabilize economic activity through interest rates and money supply (B)</p> Signup and view all the answers

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

<p>Endogenous factors (B)</p> Signup and view all the answers

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

<p>To focus on household and firm interactions (A)</p> 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?

<p>Contraction (D)</p> Signup and view all the answers

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

<p>To provide essential goods and services (A)</p> Signup and view all the answers

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

<p>Laffer Curve (D)</p> Signup and view all the answers

What can lead to shortages or surpluses in a market?

<p>Price controls (C)</p> Signup and view all the answers

What is the primary function of the foreign exchange market?

<p>To facilitate international trade (A)</p> Signup and view all the answers

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

<p>To stabilize or guide the exchange rate towards desired levels (A)</p> Signup and view all the answers

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

<p>Balance of Payments (C)</p> Signup and view all the answers

What does a BoP surplus indicate?

<p>A country is exporting more than it imports (D)</p> Signup and view all the answers

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

<p>Economic strategies (D)</p> Signup and view all the answers

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

<p>To encourage economic stability (B)</p> Signup and view all the answers

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

<p>To encourage economic efficiency (C)</p> Signup and view all the answers

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

<p>Managing resources and providing services efficiently (C)</p> Signup and view all the answers

What is the primary goal of the New Economic Paradigm?

<p>To smooth out the volatility in business cycles and achieve stable growth (B)</p> Signup and view all the answers

Which of the following is NOT a function of the foreign exchange market?

<p>Managing the balance of payments (D)</p> Signup and view all the answers

What is the primary consequence of a BoP surplus?

<p>Net inflow of money (D)</p> Signup and view all the answers

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

<p>Leading Indicators (C)</p> Signup and view all the answers

Which of the following is a consequence of administered prices?

<p>Shortages or surpluses (A)</p> Signup and view all the answers

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

<p>To handle national affairs such as defense and education (C)</p> Signup and view all the answers

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

<p>Lack of clear performance metrics (A)</p> Signup and view all the answers

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

<p>Promoting economic growth and stability (C)</p> Signup and view all the answers

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

<p>To fulfill social responsibilities (C)</p> Signup and view all the answers

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

<p>Market forces (A)</p> Signup and view all the answers

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

<p>To plan for a three-year period (D)</p> Signup and view all the answers

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

<p>Monitoring capital transactions (C)</p> Signup and view all the answers

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

<p>Inefficient outcomes (A)</p> Signup and view all the answers

What is the primary problem with state-owned enterprises?

<p>Lack of competition (A)</p> Signup and view all the answers

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

<p>To stabilize the exchange rate (B)</p> Signup and view all the answers

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

<p>To stimulate economic activity (D)</p> Signup and view all the answers

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

<p>Tracking investments in financial instruments (C)</p> Signup and view all the answers

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

<p>Laffer Curve (C)</p> Signup and view all the answers

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

<p>To provide essential services (B)</p> Signup and view all the answers

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

<p>To manage the flow of money, including savings and investments (A)</p> Signup and view all the answers

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

<p>It captures the extent to which additional spending can amplify economic activity (D)</p> Signup and view all the answers

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

<p>To collect taxes and inject spending into the economy (B)</p> Signup and view all the answers

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

<p>To involve trade activities, where exports add to the economic flow and imports lead to outflows of currency (A)</p> Signup and view all the answers

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

<p>It trades consumer goods and services (B)</p> Signup and view all the answers

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

<p>To deal in resources like labor and capital (B)</p> Signup and view all the answers

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

<p>It handles the trading of currencies necessary for international trade (B)</p> Signup and view all the answers

What is the primary purpose of the circular flow model?

<p>To illustrate the movement of money and goods across different sectors of the economy (A)</p> Signup and view all the answers

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

<p>To provide labor and resources to firms (A)</p> Signup and view all the answers

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

<p>To utilize labor and resources to produce goods and services (D)</p> Signup and view all the answers

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

<p>To include government and foreign transactions in the spending and saving behaviors (B)</p> Signup and view all the answers

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

<p>Decline in economic indicators and reduction in workforce (D)</p> Signup and view all the answers

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

<p>The emphasis on external shocks versus normal market processes (B)</p> Signup and view all the answers

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

<p>To reduce government spending and increase taxation (D)</p> Signup and view all the answers

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

<p>Peak (D)</p> Signup and view all the answers

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

<p>Technological innovation and entrepreneurship (C)</p> Signup and view all the answers

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

<p>To reveal how initial increases in spending lead to a more significant overall increase in economic output (B)</p> Signup and view all the answers

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

<p>The focus on aggregate demand versus supply-side factors (D)</p> Signup and view all the answers

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

<p>Exogenous factors (D)</p> Signup and view all the answers

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

<p>To control the money supply and interest rates (A)</p> Signup and view all the answers

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

<p>Firms (B)</p> Signup and view all the answers

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

<p>To manage the flow of money, including savings and investments (A)</p> Signup and view all the answers

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

<p>Gross Domestic Product (GDP) (D)</p> Signup and view all the answers

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

<p>To highlight the interactions between households, firms, government, and foreign sector (B)</p> Signup and view all the answers

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

<p>Foreign Exchange Market (A)</p> Signup and view all the answers

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

<p>To inject spending into the economy through public services and infrastructure (D)</p> 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?

<p>Circular Flow (A)</p> Signup and view all the answers

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

<p>Government (B)</p> Signup and view all the answers

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

<p>To trade consumer goods and services (D)</p> Signup and view all the answers

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

<p>Multiplier Effect (A)</p> Signup and view all the answers

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

<p>To encourage economic growth and stability (B)</p> Signup and view all the answers

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

<p>The government intervenes occasionally to stabilize the currency's value (D)</p> Signup and view all the answers

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

<p>To record all economic transactions between a country and the rest of the world (C)</p> Signup and view all the answers

What is the result of a BoP surplus?

<p>A net inflow of money into the country (D)</p> Signup and view all the answers

What is the primary function of the foreign exchange market?

<p>To facilitate international trade by establishing the value of currencies (A)</p> Signup and view all the answers

What can cause appreciations or depreciations in a currency?

<p>Changes in interest rates and economic stability (B)</p> Signup and view all the answers

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

<p>To manage resources and provide essential services not suitable for private sector delivery (B)</p> Signup and view all the answers

What is the Laffer Curve illustrating?

<p>The relationship between tax rates and tax revenue (D)</p> Signup and view all the answers

What can distort market operations and lead to inefficiencies?

<p>Subsidies and taxes, if not carefully managed (C)</p> Signup and view all the answers

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

<p>Method of categorizing prices (D)</p> Signup and view all the answers

What is the multiplier effect used to explain?

<p>Increases in spending leading to a larger increase in economic output (A)</p> Signup and view all the answers

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

<p>Strategies to stabilize the economy, manage inflation, and promote sustainable growth (A)</p> Signup and view all the answers

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

<p>To explain the multiplier effect (D)</p> Signup and view all the answers

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

<p>External shocks and normal market processes (A)</p> Signup and view all the answers

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

<p>Interest rates and control of money supply (C)</p> Signup and view all the answers

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

<p>Peak (B)</p> Signup and view all the answers

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

<p>To stimulate demand and pull the economy out of a recession (D)</p> Signup and view all the answers

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

<p>Business cycle (C)</p> Signup and view all the answers

What is the primary difference between GNI and GDP?

<p>GNI accounts for income earned abroad, while GDP does not (D)</p> Signup and view all the answers

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

<p>Keynesian Theory (D)</p> Signup and view all the answers

What is the primary objective of the New Economic Paradigm?

<p>To smooth out the volatility in business cycles and achieve stable growth (B)</p> Signup and view all the answers

What is the primary function of the public sector?

<p>To provide essential services that are not profit-driven (B)</p> Signup and view all the answers

What is the main challenge facing the public sector?

<p>Lack of clear performance metrics and accountability (D)</p> Signup and view all the answers

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

<p>To plan and allocate resources over a three-year period (B)</p> Signup and view all the answers

What is a Lagging Indicator in forecasting business cycles?

<p>A confirmation of trends that are already in process (D)</p> Signup and view all the answers

What is the primary role of the national government?

<p>To handle national affairs like defense and education (B)</p> Signup and view all the answers

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

<p>Inefficiency due to lack of competition (D)</p> Signup and view all the answers

What is the main objective of fiscal policy?

<p>To regulate aggregate demand through fiscal stimuli (B)</p> Signup and view all the answers

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

<p>To regulate aggregate demand through fiscal stimuli (A)</p> Signup and view all the answers

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

<p>To predict future behavior based on historical data and trends (D)</p> Signup and view all the answers

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