ECS1601 Quiz

Learning Unit 5 Questions

1.

In 2009, Ozzie purchased a 1999 Opel Corsa Lite from his neighbour for his son, a 1999 "one
owner" Camry from Larchmont Toyota for his wife, a 2009 new Ford fully manufactured in
South Africa, for himself, and sold his 1993 Dodge Caravan to his teenage nephew. Which, if
any, of these transactions will be included in the GDP in 2009?
[1] only the purchase of the Ford
[2] the trading of the Ford and the Caravan
[3] all four transactions
[4] all three purchases by Ozzie but not the sale

2.

2006
2009
Product
Price
Quantity
Price
Quantity
Camera
10
100
12
120
Legal Services
15
50
20
45
Books
40
200
45
210
Refer to the above table. Suppose that a very simple economy produces three goods:
cameras, legal services and books. Suppose the quantities produced and their corresponding
prices for 2006 and 2009 are shown in the table above. What was the real GDP in 2006, using
2009 as the base year?
[1] R28 885
[2] R11 790
[3] R10 275
[4] R11 200

3.

Which of the following is NOT a final good?

[1] a purse sold to a foreign visitor
[2] a new computer sold to a Unisa student
[3] a hot dog sold to a spectator at a Chicago Bears football game
[4] leather bought by the Toyota factory to be used for car seat covers in the cars they
produce

4.

In years with inflation, nominal GDP increases ________ real GDP.

[1] at the same rate as
[2] faster than
[3] slower than
[4] sometimes faster, sometimes slower and sometimes at the same rate as

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5.

In this question, we ask you to compute the GDP for a hypothetical economy that produces
two goods (computers and petrol). The prices and quantities produced in each year are
provided in the following table:
2006
2007
2008
Prices
Computers
R2 000
R1 900
R1 200
Petrol
R50 per litre
R100 per litre
R400 per litre
Quantities
Computers
10
16
40
Petrol
100 litres
120 litres
110 litres
5.1 Compute the nominal GDP for each of the three years.
5.2 Compute the real GDP for each of the three years, taking 2006 as the base year.
5.3 How does the real GDP in 2006 compare to the nominal GDP in 2006 when 2006 is used as
the base year?
5.4 Based on your calculations, comment on the economic well-being of the above two-good
economy. Have things improved over time for this country (in real-GDP terms)?

6.

List the five macroeconomic objectives and describe what these objectives aim to achieve.

7.

Define the following concepts:

7.1 Gross domestic product
7.2 Quantile ratio
7.3 Consumer price index

8.

Draw a Lorenz curve and explain how the Gini coefficient can be obtained by making use of
the curve.

9.

Study the table below and answer the questions that follow:
2006 in
millions
Final consumption expenditure by households
17 432
Net exports
39 456
Primary income payments to the rest of the world
20 489
Primary income payments from the rest of the world
18 563
Final consumption expenditure by government
79 489
Gross capital formation
14 569
9.1 Calculate the GDE for 2006 and 2007.
9.2 Calculate the GDP for 2006 and 2007.
9.3 Calculate the GNI at factor cost for 2006 and 2007.

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2007 in
millions
18 382
37 325
19 598
18 456
80 258
17 598

10.

Indicate whether the following statements are true or false:

10.1 The balance of payments consists primarily of two major accounts, the current
account and the financial account.
10.2 Double counting can be avoided by only counting the value of those sales where a
good or service reaches its final destination.
10.3 The production, income and expenditure methods for measuring GDP will have
different results as they calculate GDP differently.
10.4 The business owners in the informal sector dont have to pay tax because their
economic contribution is not significant.

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