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Exam Paper for Macroeconomics in BBA (with Answers)
PAPER # 1
**Macroeconomics Exam Paper**
**Duration: 2 hours**
**Instructions:**
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No notes or textbooks allowed
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Write your answers in the space provided
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--**Section A: Multiple Choice (20 marks)**
Choose the correct answer for each question and mark it on the answer
sheet
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Which of the following is a macroeconomic variable?
a) Individual income
b) Household consumption
c) National GDP

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d) Company profit
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Inflation is best defined as:
a) An increase in the overall level of prices in an economy
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c) A decrease in the overall level of output in an economy
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What is the term for the total value of all final goods and services
produced within a country's borders in a given period, usually a year?
a) Gross National Product (GNP)
b) Gross Domestic Product (GDP)
c) Net National Product (NNP)
d) Net Domestic Product (NDP)

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**Section B: Short Answer (30 marks)**
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Answer:
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Answer:
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Answer:
**Section C: Essay Questions (50 marks)**
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Provide examples to support your argument
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Analyze the causes and consequences of a trade deficit in a country
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c) National GDP
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a) An increase in the overall level of prices in an economy
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a) Increasing government spending
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Aggregate demand refers to the total spending on goods and services in
an economy
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For example, an increase in
consumer confidence can lead to higher consumer spending, shifting
aggregate demand to the right
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The Phillips Curve illustrates an inverse relationship between inflation and
unemployment
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This curve suggests that achieving both low inflation and low unemployment
simultaneously is challenging
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The classical view emphasizes that markets will self-adjust to equilibrium
without government intervention, while the Keynesian view argues that

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government intervention, such as fiscal policy, is necessary to combat
economic downturns
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Monetary policy involves the control of the money supply and interest
rates by a central bank
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Conversely, to stimulate economic activity, a central bank
can lower interest rates
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This can lead to a decrease in the country's foreign exchange
reserves, a loss of domestic jobs in certain industries, and potential longterm economic imbalances
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Additionally,
improving domestic production efficiency can also help address trade
imbalances
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Which of the following is not a macroeconomic variable?
* Gross domestic product (GDP)
* Unemployment rate
* Interest rate
* Price of a car

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* Answer: Price of a car
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Which of the following is a measure of long-term economic growth?
* Real GDP growth rate
* Inflation rate
* Unemployment rate
* Population growth rate
* Answer: Population growth rate
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Which of the following is a factor that can cause inflation?
* Increased money supply

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* Increased aggregate demand
* Decreased aggregate supply
* All of the above
* Answer: All of the above
**Section B: Short Answer Questions (20 marks)**
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* Stocks are measures of economic activity at a point in time, while flows
are measures of economic activity over a period of time
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Nominal GDP is the value of all goods
and services produced in an economy in a given year, without adjusting for
inflation
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What is the Keynesian theory of income determination?
* The Keynesian theory of income determination states that aggregate
demand determines the level of national income
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What are the different types of inflation?
* There are two main types of inflation: demand-pull inflation and costpush inflation
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**Section C: Essay Questions (20 marks)**
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* There are a number of policies that can be used to control inflation,
including:
* Monetary policy: The central bank can increase or decrease interest
rates to cool down the economy and reduce inflation
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* Supply-side policies: The government can invest in education and
training to increase the productivity of workers and reduce the cost of
production
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* The government plays a number of roles in the economy, including:
* Providing public goods, such as national defense and education
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* Stabilizing the economy through fiscal and monetary policy
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PAPER # 3
**Section A: Multiple Choice Questions (MCQs)**
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GDP
* B
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Unemployment rate
* D
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Unemployment rate is a microeconomic variable
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The classical theory of output and employment states that
* A
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* B
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* C
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* D
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* Answer: D
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output is determined by aggregate demand
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output is determined by aggregate supply
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output is determined by the intersection of aggregate demand and
aggregate supply
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output is always at full employment
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The Keynesian theory states that output is determined by
aggregate demand, which is influenced by factors such as government
spending, investment, and consumption
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The consumption function is the relationship between
* A
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* B
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* C
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* D
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* Answer: A
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the change in consumption divided by the change in income
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the change in income divided by the change in consumption
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the change in savings divided by the change in income
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the change in investment divided by the change in income
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The MPC is the amount of additional consumption that
occurs for every additional unit of income
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Define macroeconomics and microeconomics
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* 2
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* Stocks are measures of quantities at a point in time, while flows are
measures of quantities over a period of time
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* 3
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* 4
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* 5
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**Section C: Long Answer Questions**

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* 1
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* The Keynesian theory of income determination states that output is
determined by aggregate demand
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When aggregate demand is less than aggregate supply, the economy will
experience a recession
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* 2
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* The main causes of inflation are:
* An increase in aggregate demand, which can be caused by factors such
as government spending, investment, and consumption
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* The expectation of future inflation, which can lead to people
demanding higher wages and prices
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What are the remedies for inflation?
* The remedies for inflation include:
* Monetary policy, which can be used to control the money supply and
interest rates
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* Supply-side policies, which can be used to increase aggregate supply
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Which of the following is not a macroeconomic variable?
* (a) National income

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* (b) Price level
* (c) Unemployment rate
* (d) Interest rate
* (e) Consumption
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* (b) Output is determined by aggregate supply
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* (d) The economy will always reach full employment in the long run
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* (b) Output is determined by aggregate supply
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* (d) The economy will always reach full employment in the short run
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* (b) Investment and income
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* (d) Interest rates and income
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* (b) Change in income divided by the change in consumption
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* (d) Change in investment divided by the change in income
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**Section B: Short Answer Questions** (30 marks)
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What are the four main components of aggregate demand?
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What are the causes and consequences of inflation?
**Section C: Long Answer Questions** (50 marks)
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**Answers**
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(d) The economy will always reach full employment in the long run
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(a) Output is determined by aggregate demand
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(a) Consumption and income
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(a) Change in consumption divided by the change in income
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Stocks are economic variables that measure a quantity at a point in time,
while flows are economic variables that measure a rate of change over time
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Disposable
personal income is the amount of personal income that is left after taxes
have been paid
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The four main components of aggregate demand are consumption,
investment, government spending, and net exports
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Investment is the spending
by businesses on capital goods, such as factories and equipment
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Net exports is the difference between the value of exports and the
value of imports
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The three main approaches to economic growth are:
* **Investment in physical capital:** This includes investment in factories,
equipment, and infrastructure
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* **Technological progress:** This includes the development of new
technologies and the diffusion of existing technologies
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Inflation is a sustained increase in the general price level
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* **Increased costs:** This can happen when wages rise or when the
price of imported goods increases
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KEYWORDS:
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BBA Program
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BBA Exam Paper
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BBA Course
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BBA Study Guide
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BBA Exam Prep

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BBA Macroeconomics
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BBA Macroeconomics Exam
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BBA Exam Material
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Macroeconomics Test Bank
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Macroeconomics Exam Solutions
* **Introduction to Macroeconomics**
* What is macroeconomics?
* The goals of macroeconomics
* The major macroeconomic aggregates
* The circular flow of income
* **National Income Accounting**
* Gross domestic product (GDP)
* Net national product (NNP)
* Personal income (PI)
* Disposable income (DI)
* The expenditure approach to GDP
* The income approach to GDP

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* **The Aggregate Demand-Aggregate Supply Model**
* Aggregate demand
* Aggregate supply
* Equilibrium in the AD-AS model
* Shifts in the AD curve
* Shifts in the AS curve
* **Inflation**
* What is inflation?
* The causes of inflation
* The effects of inflation
* How to control inflation
* **Unemployment**
* What is unemployment?
* The causes of unemployment
* The effects of unemployment
* How to reduce unemployment
* **Economic Growth**
* What is economic growth?
* The causes of economic growth
* The effects of economic growth
* How to promote economic growth

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* **Fiscal Policy**
* What is fiscal policy?
* The different types of fiscal policies
* The effects of fiscal policies
* **Monetary Policy**
* What is monetary policy?
* The different types of monetary policies
* The effects of monetary policies
* **International Trade**
* What is international trade?
* The benefits of international trade
* The challenges of international trade
* The different theories of international trade
I hope this exam paper is helpful

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