FINAL SEMESTER EXAMINATION

(FEBRUARY 2020 SESSION)

INTRODUCTION TO ECONOMICS
BEC10103/CEC10103/EEC10103

LECTURER :…………………………………………………………

MATRIC NO : ……………….. PROGRAMME: …………………

VENUE : ………………………………………….

JUNE 2020 DURATION: 3 HOURS

INSTRUCTIONS:

1. Candidates must read all questions carefully.

2. The examination script consists of the followings:

Part Types of Instruction Answer Sheets

Questions to be Used
ONE 1 Extended Answer ALL Answer booklet
Structure questions
TWO 5 Extended Answer THREE (3) Answer booklet
Structures questions ONLY

_______________________________________________________________________________________
THIS EXAMINATION SCRIPT CONTAINS 8 PAGES INCLUDING THE FRONT COVER
DO NOT OPEN THE EXAMINATION SCRIPT UNTIL FURTHER INSTRUCTION
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PART ONE
(25 marks)
Time: 1 hour 30 minutes
INSTRUCTION
This part consists of ONE (1) question. Answer ALL questions in the answer
booklet provided.

(Question 1)

(a) You are given the following information on National income.

Items RM
National Income 258 430
Personal income tax 84 000
Social security contribution 37 500
Corporate tax 15 900
Transfer payment 51 200
Retained earnings 27 800

Find:

i. Personal Income

(4 marks)

ii. Disposable Personal Income

(2
marks)

(b) In your opinion, is National Income or GDP an accurate

measure of the standard of

living of a country. Provide reasons for your answer.

(5 marks)

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(c) The following table is from a country’s national income

accounts for year 2016.

Items RM (million)
Consumption 5,000
Investment 1,500
Transfer payments 1,000
Government expenditures 1,500
Exports 1,500
Imports 1,000
Net foreign factor income 20
Depreciation 100
Subsidy 500
Tax on consumption 300

Calculate:

i. Gross domestic product at market price

(6 marks)

ii . Gross domestic product at factor cost

(4 marks)

iii. Gross national product at factor cost

(2 marks)

iv. National income

(2 marks)

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PART TWO
(75 marks)
Time: 1 hour 30 minutes

INSTRUCTION
This part consists of FIVE (5) questions. Answer THREE (3) questions only in
the answer booklet provided.

(Question 1)

(a) The passage below was taken from a newspaper article. It reflects a
specific goal of Malaysia.

"By 2030, the GDP is projected to reach RM3.4 trillion with an annual
growth of 4.7percent between 2021 and 2030. This target is among the
benchmarks for economic growth and will be used to determine the target
goals of the Shared Prosperity Vision 2030. "

( The New Straits Times, October 13, 2019)

Describe FOUR (4) major macroeconomic goals.

(10 marks)

(b) Covid 19 Pandemic was followed by the MCO (Movement control

order) & CMCO (Conditional movement control order). Although this was
necessary for health reasons, it is estimated to have a large negative
impact on the Malaysian economy.

The country's economy is losing RM2.4billion every day business is

suspended during the movement control order (MCO).

(The Star, April 25, 2020)

The above statement reflects one of the negative effects. Analyze the
impact of MCO and CMCO on the macroeconomic goals in Malaysia as
stated in (a).

(15 marks)

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(Question 2)

Based on the table, answer the following questions.

Output Price Marginal Average Total Marginal Average

Revenue Revenue Cost Cost Cost
(unit) (RM) Total (RM)
Revenue

(RM)
0 0 500
1 198 589
2 392 660
9 1638 1168
10 1800 1330
11 1958 1550
12 2112 1850
13 2262 2262

(a) Complete table above.

(10 marks)

(b) Which market structure is the firm operating in,

perfect competition or

monopoly? Justify your answer.

(3 marks)

(c) Determine the profit- maximizing price and quantity

at equilibrium.

(4 marks)

(d) Calculate profits at equilibrium output.

(3 marks)

(e) Is the firm achieving supernormal profit, subnormal profit

or normal profit? Give your justification.

(5 marks)

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(Question 3)

(a) The table shows the money supply for the year 2017.

Items RM (Million)
Coins 15 000
Saving and fixed deposits at commercial banks 25 000
Treasury bills 12 000
Current deposits in commercial banks 40 500
Negotiable certificates of deposits 25 000
Saving and fixed deposits at merchant banks 32 500
BNM certificates 10 000
Paper money 13 000

i. Calculate the fiat money, M1, M2 and M3

(8 marks)

ii. Calculate Broad quasi - money

(2 marks)

(b) Differentiate between commercial banks and central banks. Provide

examples of each.

(6 marks)

(c) One of the main functions of money is, it acts as a medium of exchange.
Nowadays

however, more and more people are turning to electronic money (online
banking, e-wallet

etc) as it is much more convenient. In your opinion, should paper money

be discouraged in

future. Justify your answer.

(9 marks)

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(Question 4)

(a) Show the calculation and complete the table given below.

Country Labour Employed Unemployed Unemployment

force rate (%)
Belgium 81 340 76 660 4 680
Iceland 63 720 3 410
Canada 76 590 5

(10 marks)

(b) Based on the following information, identify the type of unemployment:

i. Joe was working at a new pharmacy in town, but it closed due to slow business.

(1 mark)

ii. Donna is a surf instructor who can't find a job during the winter.

(1 mark)

iii. Laura worked at a refrigerator manufacturing factory but was let go because a
machine was invented to do her job.

(1 mark)

iv. Bob is a history professor that decided to leave his job at a large university and
look for a job at a small college.

(1 mark)

v. The local automobile plant closed, which caused the local restaurant to lose
many customers, and, therefore, Sharon lost her waitressing job.

(1 mark)

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(c) Table below shows the consumer price index for the year 2015 and 2016.

Year 2015 2016

Consumer Price Index (CPI) 124 135

Based on the table above,

i. Calculate the rate of inflation for the year of 2016.

(4 marks)

ii. Explain THREE (3) effects of inflation.

(6 marks)
(Question 5)

(a) International Trade has its advantages and disadvantages. Analyze the
contributions of

international trade and the problems it can cause to a country.

(10 marks)

(b) Elaborate any FIVE (5) types of trade barriers or protectionism that can be
used by a

government to protect infant industries.

(15 marks)

END OF QUESTION PAPER

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