Topic: Macroeconomics

Lecturer: Adel S. Laureto, Ph.D.

1. In the Philippines, national income accounting is done and
maintained by what office/agency:
a. Department of Budget and Management
b. Department of Trade & Industry
c. Department of Finance
d. National Economic Development Authority (NEDA)

2. GNP represents the:
a. market value of all intermediate goods and services
produced by the economy within the year
b. market value of all final goods and services produced by the
economy within the year
c. market value of all final and intermediate goods and services
produced by the economy within the year
d. all of the above
3. GNP & GDP are closely related measures of aggregate
output or income, but GDP does not take into
account:
a. exports and imports
b. remittances from overseas workers
c. government spending
d. business investments

4. An approach to GNP (or GDP) measurements which sums
up all final sales to end-users is:
a. Expenditure approach
b. Income approach
c. Industrial Origin approach
d. Value-added approach
5. GNP/GDP excludes non-productive transactions such as
firms:
a. second hand sales
b. purely financial transactions
c. both a and b
d. neither a nor b

6. Economists prefer to use real GNP than current or nominal
GNP as a measure of aggregate output because
a. Current GNP always understates actual output
changes
b. Real GNP adjusts current GNP for inflation
c. Real GNP adjusts for the unequal distribution of
income
d. All of the above
7. Real GDP is greater than nominal GDP if:
a. imports exceeds exports
b. exports exceeds imports
c. prices are falling
d. prices are rising

8. Which of the following is not a component of GDP?
a. net exports
b. investments
c. sales of intermediate goods
d. government spending
9. When net export is positive the amount is:
a. deducted from the GNP
b. Added to the GNP
c. divided by the GNP deflator
d. multiplied by 100%

10. The difference between GNP and NNP is accounted for
by:
a. indirect taxes
b. personal taxes
c. depreciation
d. government transfers
11. Suppose the Nominal GDP in 2009 was 500 billion pesos
and the CPI was 125, then the real GDP must be:
a. P 125 billion
b. P 400 billion
c. P 300 billion
d. P 500 billion

12. Based in # 11, if the population in 2009 were 80 million
people, then the real per capita GDP must be:
a. P 3,000
b. P 4,000
c. P 5,000
d. P 6,000
13. Suppose that the consumer price index for 2007, 2008
and 2009 are 100, 110, and 125, respectively. This
implies that the general price level in 2009 is higher
than that of 2007 by:
a. 25 pesos c. 25 percent
b. 15 percent d. 10 pesos

14. Still continuing from question #11, if nominal GNP in
2005 placed at P 300 billion, we can say that the
growth rate in nominal GNP between 2005 and 2009
is:
a. 60% b. 63% c. 67% d. 70%
15. Keynes fundamental law of consumption states that:
a. the change in income is greater than the changes in
consumption
b. the changes in consumption is greater than the
change in income
c. people stop consuming when they become affluent
d. none of the above

16. The consumption function/equation C = 20 + .90 Y
d

predicts that consumption is:
a. 90 when disposable income (Y
d
) is 100
b. 100 when Y
d
is 90
c. 110 when Y
d
is 100
d. 180 when Y
d
is 200
17. The marginal propensity to consume (mpc) is the ratio
of:
a. Extra consumption to extra income
b. Total consumption to total income
c. Extra consumption to total income
d. Total consumption to extra income

18. If the marginal propensity to consume (mpc) is 0.75 the
marginal propensity to save (mps) is:
a. 15 b. 20 c. 25 d. 75
19. If the mpc is 0.75, the multiplier has a value of:
a. 5 c. 3
b. 4 d. 2

20. It measures the change in the equivalent level of income
due to a changes in the aggregate expenditures
a. marginal propensity to consume
b. multiplier
c. balance budget multiplier
d. marginal propensity to save

21. Based from #16, if C = 20 + .90Yd, the equivalent saving
function is:
a. S = -20 + .10Y
d
c. S = 20 - .9Y
d
b. S = 0 + .Y
d
d. S = .9 + 20 Y
d

22. The exact relationship between the mpc and the mps is:
a. mpc = mps c. mpc + mps = 0
b. mpc + mps = 1 d. mpc mps = 1
23. The larger the mps:
a. The smaller the multiplier
b. The larger the multiplier
c. The larger the mpc
d. The greater the investment

24. Disposable income can either be spent on which two
items?
a. savings and consumption
b. consumption and investment
c. savings and investment
d. none of the above

25. Equilibrium in the economy occurs in a two-sector model
when:
a. savings equals investment
b. consumption plus investment equals planned
investment
c. investment plus government spending equals savings
plus taxes
d. all of the above


Given the following equations, answer items 26-29:
S = -25 + 0.4Y ; G = 20 ; I = 15 ; T = 0
26. The equilibrium level of income (Y) is:
a. 100 b. 120 c. 150 d. 200

27. The equilibrium level of consumption spending is:
a. 100 b. 115 c. 125 d. 90

28. The equilibrium level of saving is:
a. 25 b. 35 c. 55 d. 60

29. The value of the multiplier is:
a. 1.6 b. 2.0 c. 2.5 d. 3.0
30. Monetary policy refers to government policies related
to:
a. wages and prices
b. Money supply, credit and interest rates
c. Government expenditures and taxation
d. Investments

31. Fiscal policies are government policies related to:
a. wages and prices
b. Money supply, credit and interest rates
c. Government expenditures and taxation
d. Investment
32. Which of the following is consistent with a tight
monetary policy?
a. Low interest rates
b. High reserve requirement
c. increase money supply
d. Subsidizing interest rates to borrowers

33. Money supply will normally increase when:
a. The BSP increases the reserve requirement
b. The government sells bond to the public
c. The BSP lowers the rediscount rate
d. all of the above
34. When lending interest rates are low, the primary effect is
to:
a. encourage investment
b. discourage investment
c. encourage investment
d. discourage consumption

35. If the national governments revenues exceed its
spending, there is:
a. budget deficit c. balanced budget
b. budget surplus d. none
36. The bulk of government spending is a accounted for by
a. maintenance and operating expenses
b. debt service
c. personal services
d. capital outlay

37. Money in a modern economy performs such function (s)
as:
a. medium of exchange
b. store of value
c. standard of deferred payment
d. all of the above
38. Nominal money supply is:
a. the peso value of the nations money supply
b. flow of receipts per unit of time
c. checking accounts at commercial banks
d. peso value of the money supply over the price level

39. Keynes recognized that there are three distinct motives for
holding money. How would you classify money balances held
to meet unforeseen contingencies because of uncertainty
about the receipt and expenditure of future income.
a. speculative demand for money
b. transaction demand for money
c. precautionary demand for money
d. real demand for money

40. A household purchased dollars this time that the
Philippine peso is strong given an exchange rate of
Php47:$1, with the anticipation to sell said dollars
when its value appreciates. What demand for money
is exhibited by this situation?

a. speculative demand for money
b. transaction demand for money
c. precautionary demand for money
d. real demand for money
41. By open market operations we mean the actions of the
government to:
a. Increase or decrease government spending
b. Increase or decrease taxes
c. Buy and sell government securities or bonds
d. Buy and sell investment goods and services

42. The rate at which the BSP charges commercial banks is
called:
a. Interbank rate
b. Rediscount rate
c. Overnight lending rate
d. Prime rate
43. The reserve held by the bank over and above the legal
reserve
a. Required reserve
b. Excess reserve
c. interbank rates
d. None of the above

44. A devaluation refers to:
a. An increase in the value of foreign currency in terms
of domestic currency
b. A decrease in the value of foreign currency in terms
of domestic currency
c. An increase in the value of domestic currency in terms of
foreign currency
d. None of the above
45. The governments total revenues are divided into:
a. Tax and non-tax revenues
b. Income tax and tax on property
c. VAT and income tax
d. Prime rate

46. This is a phase in the business cycle when economic
prosperity is experienced
a. recessional phase
b. peak phase
c. expansion phase
d. trough phase
47. Which of the following is mostly associated with
unemployment due to business recessions?
a. frictional unemployment
b. cyclical unemployment
c. seasonal unemployment
d. structural unemployment

48. This type of unemployment happens as new workers
enter the labor force and as workers change jobs for
one reason or another
a. natural unemployment
b. frictional unemployment
c. structural unemployment
d. cyclical unemployment
49. Inflation causes:
a. a loss to fixed income earners
b. a decline in the purchasing power of money
c. a loss to lenders of money and a benefit to borrowers
of money
d. all of these are possible

50. What type of unemployment is caused by a deficiency of
aggregate or total demand?
a. natural unemployment
b. frictional unemployment
c. structural unemployment
d. cyclical unemployment
51. Cost-push inflation maybe caused by:
a. Lower business spending
b. Higher budget deficits
c. Higher labor cost
d. Lower government spending

52. Demand-pull inflation may result from:
a. Higher wage rates
b. Higher taxes
c. Lower budget deficits
d. Lower taxes
53. Inflation brought about by considerable market power is
related to as:
a. demand-pull inflation
b. cost-push inflation
c. structural inflation
d. all of the above

54. Crude oil is one of the primary inputs to production for it runs
factory machines and equipment. An increase in its price in the
world market will result to what type of inflation?
a. Demand pull or Excess demand inflation
b. Cost push inflation
c. Demand shift inflation
d. None of the above
55. Which of the following groups is not penalized by
inflation?
a. savers
b. debtors
c. creditors
d. fixed money income groups

56. The most commonly used measure of change in the
general price level is
a. cost of living
b. consumer price index (CPI)
c. price increase
d. supply of money
57. Stagflation is a situation that occurs when:
a. the unemployment rate is high and the inflation rate
is low
b. the unemployment rate is low and the inflation rate
is high
c. both rates are high
d. both rates are low

58. A term created to describe a situation of simultaneous
economic stagnation, high unemployment and
inflation is:
a. deflation c. depression
b. inflation d. stagflation
59. The current law which addresses food security and
competitiveness of the agricultural sector is known as
a. Agriculture and Fisheries Modernization Act
b. Agriculture and Forestry Modernization Act
c. Agriculture Fisheries and Mining Act
d. Agriculture Farm Management Act

61. An act mainstreaming climate change into government
policy formulations.
a. RA 9168 c. RA 9003
b. RA 9147 d. RA 9729
62. An act to provide protection to new plant varieties
establishing a National Plant Variety Protection Board.
a. RA 9168 b. RA 9147 c. RA 9003 d. RA 9729

63. An act providing for an ecological solid waste
management program.
a. RA 9168 b. RA 9147 c. RA 9003 d. RA 9729

64. An act to promote animal welfare in the Philippines,
otherwise known as the Animal Welfare Act of 1998.
a. RA 9168 b. RA 9164 c. RA 9003 d. RA 8485
65. An act prescribing urgent related measures to modernize
the Agriculture and Fisheries sectors of the
Philippines.
a. RA 1937 b. RA 8435 c. RA 9147 d. RA 9003

66. An act to strengthen Agriculture and Fisheries
Modernization in the Philippine by extending the
effectivity of tax incentives and its mandated funding
support amending for this purpose sections 109 and
112 of RA 8435 is:
a. RA 9281 b. RA 9147 c. RA 9003 d. RA 1937
67. The law which promotes high value crops is given by
a. RA 3438 b. RA 7900 c. RA 6455 d. RA 6430

68. When a government wishes to create excess demand for
foreign exchange, it basically adopts which of the
following:
a. Devaluation c. Depreciation
b. Overvaluation d. Deterioration