QUESTION 1 (20) Choose the most correct answer from the following multiple choic

Question

QUESTION 1 (20)
Choose the most correct answer from the following multiple choice questions and write only the alphabet next to the question number. E.g. 1.20. A
1.1 Economics concerns itself with:
i. A systematic understanding of patterns of production, consumption and distribution of goods and services.
ii. A study of money, banking, capital formation and wealth.
iii. A study of how limited resources are used to satisfy unlimited human wants.
iv. The study of the application of scarce means to a multitude of human wants.
Which of the above statements can be associated with the broad subject matter studied in economics?
a) None of them.
b) All of them.
c) Only statements i, ii and iii.
d) Only statements i, iii and iv.
1.2 The basic economic problems faced by a socialist economy are:
a) Different from those faced by a mixed economy.
b) Different from those faced by a market economy, but the same as those faced by a mixed economy.
c) Similar to those faced by both a market and a mixed economy.
d) Different from those faced by a market economy.
1.3 GDP at ________ prices will usually be greater than GDP at ________ prices because of ________.
a) constant; current; inflation
b) current; constant; inflation
c) constant; current; depreciation
d) current; constant; depreciation
1.4 Which one of the following is the essential function of money?
a) Medium of exchange (or means of payment).
b) Store of value.
c) Factor of production.
d) Source of income.
1.5 When the inflation rate is expected to exceed the target rate by a significant margin, the South African Reserve Bank (SARB) will tend to:
a) Reduce the cost of credit to the banks.
b) Increase the repurchase rate (repo rate).
c) Purchase government bonds on the open market.
d) Decrease the repurchase rate (repo rate).
MANCOSA: BBA YEAR 1
PROGRAMME HANDBOOK: JANUARY 2018 INTAKE
74
74
1.6 Which one of the following statements is incorrect?
a) Central government forms part of general government.
b) Provincial government forms part of the public sector.
c) Local government forms part of general government.
d) Public corporations form part of general government.
1.7 If two countries have differing opportunity costs of production for two goods, then:
a) Each country should specialise in the good for which it has a higher opportunity cost of production.
b) Only the country with an absolute advantage in the production of both goods stands to gain from trade.
c) Each country should purchase inputs from the other country in order to gain an absolute advantage.
d) Each country should specialise in the production of the good for which it has a relative advantage.
1.8 Which one of the following statements about the consumption function is incorrect?
a) Consumption spending consists of autonomous consumption and induced consumption.
b) Autonomous consumption consists largely of spending on durable consumer goods.
c) Autonomous consumption is independent of the level of income.
d) As income increases, the level of induced consumption increases.
1.9 A depreciation of the rand may have inflationary consequences in South Africa because it:
a) Increases the costs of exports.
b) Discourages savings.
c) Decreases the international competitiveness of South African producers.
d) Increases the costs of imported goods.
1.10 During a recession, cyclical unemployment will ________ and cyclical inflation will ________.
a) decrease; decrease
b) decrease; increase
c) increase; increase
d) increase; decrease

Explanation / Answer

QUESTION 1 (20)

Answer is in bold font

1.1 Economics concerns itself with:
i. A systematic understanding of patterns of production, consumption and distribution of goods and services.
ii. A study of money, banking, capital formation and wealth.
iii. A study of how limited resources are used to satisfy unlimited human wants.
iv. The study of the application of scarce means to a multitude of human wants.
Which of the above statements can be associated with the broad subject matter studied in economics?
a) None of them.
b) All of them.
c) Only statements i, ii and iii.
d) Only statements i, iii and iv.
1.2 The basic economic problems faced by a socialist economy are:
a) Different from those faced by a mixed economy.
b) Different from those faced by a market economy, but the same as those faced by a mixed economy.
c) Similar to those faced by both a market and a mixed economy.
d) Different from those faced by a market economy.
1.3 GDP at ________ prices will usually be greater than GDP at ________ prices because of ________.
a) constant; current; inflation
b) current; constant; inflation
c) constant; current; depreciation
d) current; constant; depreciation
1.4 Which one of the following is the essential function of money?
a) Medium of exchange (or means of payment).
b) Store of value.
c) Factor of production.
d) Source of income.
1.5 When the inflation rate is expected to exceed the target rate by a significant margin, the South African Reserve Bank (SARB) will tend to:
a) Reduce the cost of credit to the banks.
b) Increase the repurchase rate (repo rate).
c) Purchase government bonds on the open market.
d) Decrease the repurchase rate (repo rate).
MANCOSA: BBA YEAR 1
PROGRAMME HANDBOOK: JANUARY 2018 INTAKE
74
74
1.6 Which one of the following statements is incorrect?
a) Central government forms part of general government.
b) Provincial government forms part of the public sector.
c) Local government forms part of general government.
d) Public corporations form part of general government.
1.7 If two countries have differing opportunity costs of production for two goods, then:
a) Each country should specialise in the good for which it has a higher opportunity cost of production.
b) Only the country with an absolute advantage in the production of both goods stands to gain from trade.
c) Each country should purchase inputs from the other country in order to gain an absolute advantage.
d) Each country should specialise in the production of the good for which it has a relative advantage.
1.8 Which one of the following statements about the consumption function is incorrect?
a) Consumption spending consists of autonomous consumption and induced consumption.
b) Autonomous consumption consists largely of spending on durable consumer goods.
c) Autonomous consumption is independent of the level of income.
d) As income increases, the level of induced consumption increases.
1.9 A depreciation of the rand may have inflationary consequences in South Africa because it:
a) Increases the costs of exports.
b) Discourages savings.
c) Decreases the international competitiveness of South African producers.
d) Increases the costs of imported goods.
1.10 During a recession, cyclical unemployment will ________ and cyclical inflation will ________.
a) decrease; decrease
b) decrease; increase
c) increase; increase
d) increase; decrease

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