EKN214 First Semester Test February 2014 ClickUP.pdf

EKN214 First Semester Test February 2014 ClickUP.pdf -...

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UNIVERSITY OF PRETORIA FACULTY OF ECONOMIC AND MANAGEMENT SCIENCES DEPARTMENT OF ECONOMICS ECONOMICS 214 SEMESTER TEST FEBRUARY 2014 Total: 50 Marks Time: 90 Minutes Examiners: Dr HR Bohlmann Prof MC Breitenbach ANSWER ALL QUESTIONS QUESTION 1 DEFINITIONS Write down a brief definition for each of the following terms: 1.1 Endogenous variables 1.2 Exogenous variables 1.3 Cobb-Douglas production function 1.4 Diminishing marginal product of labour 1.5 Monetary policy (10) QUESTION 2 GENERAL MACROECONOMICS Answer the following questions concerning general macroeconomics as clearly and concisely as possible: 2.1 As discussed in class, there are five macroeconomic outcomes policymakers typically strive for (primary economic policy goals). Name each of these and briefly comment on South Africa’s recent performance with regard to each of these outcomes. (If you are an international student, you may instead comment on the macro performance of your native country). (10) 2.2 From 2008 to 2013, the monetary base (B) in the United States virtually tripled, yet money supply (M1) only increased by around 50%. Write out the money multiplier equation showing the relationship between growth in B and M1 and briefly comment on what caused this deviation in growth between these two variables. (5)
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QUESTION 3 NATIONAL INCOME, MONEY AND INFLATION Answer the following questions concerning national income, money and inflation in a classical long-run economy as clearly and concisely as possible: 3.1
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