2024 JC2 EC Term 2 Macro Revision

When the Gini Coefficient is high, it can lead to material SOL being

• understated

• overstated

• no impact

Purchasing Power Parity (PPP) accounts for

• the differences in market exchange rate

• the differences in cost of living

True/False?

To achieve sustainable growth, there can be tradeoffs with actual and/or potential growth.

• True

• False

Statistics on unemployment rate tells us about _________ directly (choose the best answer).

• material SOL

• non-material SOL

We use the Marshall-Lerner condition when explaining: (choose all that apply)

• How a change in inflation affects (X-M)

• How a change in exchange rate affects (X-M)

• How a change in income levels affect (X-M)

True/False?

When corporate tax rate rises, firms’ unit cost of production increases, causing AS to decrease and shift upwards.

• True

• False

Answer explanation

Remember to differentiate between DIRECT versus INDIRECT taxes.

True/False?

An increase in productivity will lead to improvement in the quality of goods and services, increasing productive capacity which will increase LRAS and shift the AS curve rightwards.

• True

• False

Answer explanation

Recall the factors that will shift the AS curve,

True/False?

When more workers are hired and unemployment falls, LRAS increases and shifts right.

• True

• False

Answer explanation

Recall the factors that shifts the AS curve.

The​ ​Consumer​ ​Price​ ​Index​ ​(CPI)​ ​can​ ​be​ ​defined​ ​as

• The​ ​market​ ​value​ ​of​ ​all​ ​final​ ​goods​ ​and​ ​services

• A​ ​measure​ ​of​ ​inflation​ ​based​ ​on​ ​the​ ​cost​ ​of​ ​a​ ​fixed​ ​“household​ ​basket”

Answer explanation

Refer to p. 3 of Price Stability notes

Who implements the monetary policy? Choose the best answer.

• The central bank

• The government

• The state

• The ministry of finance