The Module 1 Test will feature two (2) papers:

Content

TOPIC: National Income Accounting

Students should be able to:

1. explain the circular flow of income;

2. explain the concept of National Income Accounting;

3. explain the different ways of deriving National Income Accounts;

4. interpret National Income statistics;

5. use National Income accounts to analyze the performance on an economy as a whole;

6. derive real GDP from nominal GDP;

7. explain the limitations of GDP.

TOPIC: Basic Keynesian Models

Students should be able to:

1. explain the consumption function;

2. explain the relationship between saving and consumption;

3. calculate the simple multiplier;

4. explain the effect of changes in investment on national income;

5. explain the effect of government spending on national income;

6. describe the effect of withdrawals and injections on national income;

7. explain the relationship between net exports and national income;

8. determine the equilibrium level of national income;

9. explain inflationary and deflationary gaps.