Economics is the social science that analyzes the production, distribution, and consumption of goods and services.

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Thursday, 29 December 2011

SelamaT DatAnG kE BloG iNi

assalamualaikum wbt...

Terima kasih kerana mengunjungi blog ini. Blog ini di tulis bertujuan untuk berkongsi sedikit ilmu ekonomi yang ada. Untuk pengetahuan, nota ekonomi ini di ilhamkan daripada selibus makroekonomi dan mikroekonomi di Kolej Profesional Mara. 

Bagi menjaga hak cipta terpelihara, pembaca semua tidak diizinkan untuk "copy and paste" segala maklumat yang terdapat dalam blog ini. kecuali dengan izin Cikgu Amir

Segala maklumat baru akan di maklumkan pada halaman utama pages ini. 

Sesiapa yang memiliki nota dan latihan ekonomi yang ingin dikongsikan bolehlah emel kepada Cikgu Amir di alamat (emel).

Wednesday, 21 December 2011

Chapter 1 macro : quiz 1


sahabat sekalian...nak tanya la..sape tau nak buat kuiz question mcm kata atas jawapan n analisis soalan leh dpt gak..lepas jawab tu..tau tak mcm mana?

kalau mcm atas nie jer..senang jer..tolong ye kawan2...

Tuesday, 13 December 2011

Monday, 5 December 2011

Example Multiple Choice Questions

Example Multiple Choice Questions: Chapter 5

1.                1.   An economy that trades with other countries has which kind of economy?
A.                  Import
B.                  Export
C.                  Closed
D.                 Open

2.               2.    Which of the statements is the best define of quota?
A.                  Encourage free trade
B.                  Are a tax on imported goods
C.                  Set number of units goods that can be imported
D.                 The minimum quantity of the goods can be imported

3.               3.    What impact will a tariff have on imported car?
A.                  The tariff will make cars more expensive domestically
B.                  The tariff will make cars more cheaper domestically
C.                  The tariff will encourage the investment
D.                 The tariff will decrease unemployment

4.                4.   Which of the following is one of the balance of payments accounts?
A.                  Government spending account
B.                  Capital ac count
C.                  Reserve account
D.                 Net borrowing accounts

5.               5.    Which policy tends to reduce the balance of payments deficit?
A.                  An increase in import tariff
B.                  A reduction in government spending
C.                  A reduction in the level of interest rates
D.                 A rise in the country’s currency exchange rate

6.               6.    What would result from a devaluation of a country’s exchange rate?
A.                  An increase in domestic currency price of imports
B.                  An increase in the foreign currency price of exports
C.                  An increase in the foreign currency price of imports
D.                 A reduction in the domestic currency price of exports

Policy to reduce BOP deficit

Policy to reduce BOP deficit

1.         Monetary policy
Government increase the rates of interest rate, it become costly to borrow, people borrow less, spend less, so consumption decrease. (When money supply decrease the aggregate for the total import will reduced)

2.         Fiscal policy
Increase taxes for import goods (tariff) will causes increasing in the prices of imported good. So, demand for import goods will fall. The demand for imported goods decrease causes the falling in outflow income. So, deficit in BOP will controlled.

3.         Direct control
Discourage imports, imposed trade barriers for example: tariff, it will lead to an increase in the price of import goods, so the value of imports goods will reduces. (Or encourage people to buy local goods instead of import goods)

Encourage export, by giving subsidies to exporters where can reduces the cost of production and total export will increase. (by giving allowances to export duties)

4.         Devaluation
Decrease value of domestic currency compare with foreign currency.

Before devaluation $1USD = RM3.50
After devaluation $1USD = RM3.80

So, high cost to buy import goods. The domestic goods will cheaper then foreign goods. So, inflow incomes will more than outflow income. So, problems of deficit BOP will controller.


A.                 Methods used to finance a balance of payments deficits
                                             i.                        Borrowing
-          Another country
-          The International Monetary Fund (IMF)
-          The International Finance Corporation (IFC)
-          The International Development Association (IDA)

                                           ii.                        Imports on credit
-          Purchase now, pay later

                                         iii.                        Exporting Gold
-          The reserves of gold held by Malaysia can be exported to cover the deficit.

                                         iv.                        Receiving Foreign aid
-          An outright gift in money or materials
-          An interest free loan
-          An outright cancellation of debt owed.

B.                 Methods used to correct a recurrent deficit

                                             i.                        Restrict imports.
There are many ways of trying to reduce imports. The first is by imposing tariff on imported goods. This will raise the prices of imported goods and thus tend to reduce the demand for them.

It will only reduce expenditure on imported goods if the demand for imported goods is elastic. This means when the price of import rises a little, the local people will reduce the quantity purchased by a large amount. As a result of this the expenditure on imported goods will decrease.

                                           ii.                        Increase exports.

There are many methods that can be used to increase export revenue. For example by increasing the quality of the export goods, it can be done by carrying out research and development. The exported goods can more quality with using the modern technology in production processing.

Besides that’s, government can encourage of export by reducing the cost of production. It can decrease the cost to produce something goods. So, the exporter can increase the efficiency in production and more goods can be export out of country.

The government also can give subsidies to exporters. This ways causes the exporter to export more quantities of the exported goods.

                                         iii.                        Devaluation.

Devaluation occurs when a country announces to reducing the value of local currency in term of others currency in the world. By this method, the exported goods become cheaper to the foreigners and imported goods become expensive to the local people.

            Before devaluation   RM3.50 = USD$1
            After devaluation      RM3.80 = USD$1

If a book in Malaysia is RM30, how much the foreigners need to pay if devaluation was occurred?

The Balance of Payments

The Balance Of Payments
Balance of payments is a record of a country’s trade in goods, services, and financial assets with the rest of the world.
Balance of payments is a record of the total receipts and payments between one country and another during a year.
It is finance balance in and out a country within a year.  Balance of payments can be divided to 3 main accounts; namely current account, capital account and overall account.

A.                 The Current Account

Current account is the record of a country’s imports and exports of goods and services, plus incomes and transfers of money to and from abroad.

Current account can divide by two; visible trade and invisible trade

 i.                        Visible Trade
This includes the value of imports and exports. In visible trade, it’s only taking the value of imports and exports goods. For services, it does not include in the visible trade but it’s including in invisible trade account.

                                                       ii.            Invisible Trade
This includes the value of imports and exports services. The services can divide for more components. In the visible trade have 3 main components like services account, income account and nets transfer.

Services account
·                     All services transaction either it accepting from overseas or service which gave to foreigners.
·                     Example; travelling, transportation, post office and others.

Income account
·                     These consist of wages, interest and profits flowing into and out of the country. For example, dividends earned by a foreigners. (Debit item).

Nets transfers
·                     These include government contribution to and receipts, international transfer of money by private individuals or firms.

Format for currents account

RM Millions
a.             Visible trade
+     Export
-           Import

=     balance of trade



b.            Invisible trade
+        Services account
+        Income account
+        Nets transfers

=      Invisible balance



c.             Balance on Current Account
=      a  +  b

B.                 Capital Account

The capital account records all transactions between a domestic and foreign resident that involves a change of ownership of an asset.

It is the net result of public and private international investment flowing in and out of a country. This includes foreign direct investment, portfolio investment (such as changes in holdings of stocks and bonds) and other investments (such as changes in holdings in loans, bank accounts, and currencies).

Formats to calculate BOP
RM Millions
A.      Current Account
              i.            Visible trade
+     Export
-           Import
=     balance of trade

            ii.            Invisible trade

a.        Services account
+               Transportation
+               Travel
+               Government Services
+               Others Services

= Balance of Services Account

b.       Income account
+         Investment income
+         Dividend/ interest
+         Wages/ salary

= Balance of Income Account

c.        Nets transfers

=      Invisible balance (a + b + c )

=      Balance of Current Account
        (visible trade + invisible trade)









B.       Capital Account
+         Direct investment
+         Portfolio investment
+         Long term investment
+         Private capital
+         Others investment/ capital

= Balance of Capital Account


C.       Net Transfers

Balance of Payment
[ A + B + C ]