Question 8:
Suppose the following are national accounting data for a given year for Malaysia (hypothetical data).
Amount (Billions $AUD) Consumption of fixed capital 285 Gross private domestic investment 725 Government consumption expenditures 720 Government investment expenditures 165 Imports -550 Exports 625 Household consumption expenditure 3010 Net property income paid overseas -35
4
(a) Calculate GDP and the country’s gross national expenditure using the expenditure approach;
(b) Derive the country’s gross national product (GNP);
(c) Derive the country’s net national product (NNP);
(d) Derive the country’s current account balance;
(e) Derive the country’s gross national savings.
(2 marks each)
Question 9: (2.5 marks each part)
Using the aggregate demand-aggregate supply (AD-AS) diagram, show how the four economic events would affect economic activity, the price and employment levels. (Note: use a separate AD-AS diagram for each event)
(a) A decrease in personal income tax;
(b) An increase in workforce skills through special training programs; (c) An decrease in exports; (d) An increase in an economy’s capital stock.
Question 10:
(a) Describe three problems of using fiscal policy to achieve a precise level of GDP. (3 marks)
(b) Why is frictional unemployment inevitable in an economy characterised by imperfect job information and non-zero job-search time? (3.5 marks)
(c) Is structural unemployment something macroeconomic policymakers should be concerned about? How does it differ from cyclical unemployment? (3.5 marks)
Question 11: (10 marks total – 5 marks each part)
(a) Illustrate and explain with diagrams the difference between demand-pull and cost-push inflation; (2.5 marks for the diagram and 2.5 marks for the explanation)
(b) Provide (describe) two (2) causes of each type of inflation (2.5 marks for 2 demand-pull causes and 2.5 marks for 2 cost-push causes)
Question 12:
(d) If the Bank Negara Malaysia sold RM800 million of government securities to private sector money markets, holding other things being held constant, what is the effect on: (4 marks —1 mark each). Please explain your answer.
(i) The economy’s monetary base; (ill Short-term money market interest rates,
