1.1 Market failure implies that the market mechanism... (4 marks) a)|eads the economy to a point outside the production possibilities curve. b)leads the economy to the wrong mix of output. c) causes shortages or surpluses in the market. d)causes government failure. 1.2 GDP can be calculated by all of the following methods except... (4 marks) a)adding up the spending on goods and services by business, government, households and foreigners, and subtracting imports. b)adding up the "value added" at every stage of production in the economy. c) adding up all the of the receipts of households, government, and business. d)adding up all income and expenses by consumers and businesses. 1.3 To avoid the same output more than once, the calculation of (4 marks) GDP includes... a) intermediate goods plus final goods. b)only the value of final goods. c) the value added at each stage of production plus intermediate goods. d)cnly the output produced by South African factors of production. 1.4 Net domestic product (NDP) is determined by... a)subtracting depreciation from GDP. b)adding consumption, investment, government expenditures, and net exports. c)adding the appreciation of assets (such as property) to GDP d)subtracting consumption from GDP 1.5 The social well-being of a country... [4 marks) a)is best measured by GDP per person in the economy. b)a|ways increase when real GDP increases. c)decreases when real GDP decreases. d)is measured by more than changes in real GDP. 1.6 The macro consequence of unemployment includes... (4 marks) I lost output for the economy ll lost income for the individual worker I\" a leftward shift in the production possibilities curve. a) | only b)ll only c)l and Il d)| and III 1.7 To be officially counted as unemployed, one must be... (4 marks) I. actively seeking employment ll. not employed at a full-time job. I\". either not employed or working only part-time a) | only b)ll only c)l and II d)l, II and III 1.8 Nancy returns to school to study medicine. After graduating during an economic boom, she spends six months looking for a job. During this period, she is considered... (4 marks) a) cyclically unemployed. b)structurally unemployed. c)frictionally unemployed. d)seasonally unemployed. 1.9 Inflation means... (4 marks) a) specific prices are rising, and relative prices are falling. b)both relative prices and average prices are raising. 0) relative prices are rising, but it is not certain what is happening to average prices. d)average prices are rising, but it is not certain what is happening to relative prices. 1.10 Which of the following groups is protected from a sudden increase in inflation? (4 marks) a) Borrowers who have loans at fixed interest rates. b)Fixed income groups. 0) Workers who receive fixed wages under multiyear contracts. d)People who rent their homes under shortterm leases in comparison with those who own their homes. 1.11 The Consumer Price Index is... (4 marks) a) a measure of changes in the average price of all goods and services. b)a measure of changes in the price of all consumer goods and services. 0) used to measure the impact of business speculation on consumers. d)the impact felt by consumers who move into a higher tax bracket because of inflation. 1.12 Longrun economic growth can occur as a result of... (4 marks) a) a rightward shift in aggregate demand. b)the employment of more of the available resources. c)a technological advance. d)an increase in the prioe level. 1.13 Labour productivity is a measured as the... (4 marks) a) dollar value of output per unit of labour. b)output per labour-hour. c) hourly wage rate divided by output per labour-hour. d)dollar value of inputs per unit of output. 1.14 Fiscal policy includes all of the following except... (4 marks) a) tax cuts. b)tax increases. c) interest rate increases. d)discretionary spending by the government. 1.15 Monetary policy tools include... (4 marks) a) income taxes and the discount rate. b)open market transactions and government spending. c) the reserve ratio and the discount rate. d)open market transactions and deregulation. 1.16 Which of the following is a Keynesian approach for dealing with a recession? (4 marks) a) Raise interest rates. b)lncrease government expenditure. c) Raise tax rates. d)increase supply incentives for producers. 1.17 An economy with no government and n0 foreign trade tends to move toward equilibrium GDP because at output levels greater than equilibrium GDP, inventories are... (4 marks) a)increasing, and actual investment exceeds desired investment. b)increasing, and actual investment is less than desired investment. c) decreasing, and actual investment exceeds desired investment. d)decreasing, and actual investment is less than the desired investment. 1.18 Demand-pull inflation can develop when... (4 marks) a) there is a shortage of investment and investors bid up interest rates. b)inventories shrink and consumer bid up prices. c) there is a surplus of resources and so wages are bid up by employers. d)undesired investment occurs. 1.19 Consider the following diagram and answer the question that follows. (4 marks) 'U I I I I I I I __+___ PRICE LEVEL AD, '0 | | | | | | -u--- \"r-- I | | | | __ r m | I REAL OUTPUT [S billions per year) Suppose that as a result of expectation of lower sales in the future, a decrease in autonomous business investment causes aggregate demand to shift from ADD to AD1 as shown in the figure. Which of the following statements is true? a)According to Keynesian theory, the economy will quickly adjust back to full employment. b)According to Keynesian theory, additional decreases in aggregate demand will occur. 0) In order the absence of any additional decrease in investment, the equilibrium will remain at Q1 indefinitely. d)The GDP gap will be eliminated by the multiplier. 1.20 The multiplier process can occur when a decrease in investment spending... (4 marks) a)increases household saving, causing consumers to buy more goods and services. b)reduces household incomes, causing consumers to buy fewer goods and services. c)increases household incomes, causing consumers to buy fewer goods and services. d)reduces households incomes, causing consumers to buy more goods and services. 1.21 Read the following extract and answer the question that follows. (4 marks) "Despite pandemic-induced economic uncertainty, SA's agricultural sector is flourishing, with the country shipping $10.2bn (about R150bn) worth of produce in 2020 or 3% more than in the previous year. This is the second-highest level after the record export value of $10.7bn in 2018, according to data issued on Monday by the Agricultural Business Chamber of SA (Agbiz)." Source: https://www.businesslive.co.za/bd/economy/2021-02-15-agricultural-exports-soar-to-near- record-level/ Accessed: 16/02/21 According to economic trade theory, South Africa will export agricultural produce if... I it has a comparative advantage in producing agricultural products. Il it has an absolute advantage in producing agricultural products. Ill it can produce agricultural products at a lower opportunity cost. a) I only b) ll only c) ll and Ill d) I and Ill1.22 Read the following extract and answer the question that follows. (4 marks} \"The Covid19 pandemic upended food supply chains, paralyzing shipping, sickening workers that keep the world fed and ultimately raising consumer grocery costs around the globe last year. Now farmers -- especially ones raising cattle, hogs and poultry -- are getting squeezed by the highest corn and soybean prices in seven years. It's lifted the costs of feeding their herds by 30% or more. To stay profitable, producers including Tyson Foods Inc. are increasing prices, which will ripple through supply chains and show up in the coming months as higher price tags for beef, pork and chicken around the world.\" Source: htt s:flwww.bloomber .comlnewsfarticles/202102161theworld-will- a -more-for-meat-as- food-inflation-deepens Accessed: 16IO2i2'l The factors resulting in inflation presented here are... |. Initiating factors ll. Underlying factors \"I. Cost push a) | only b) H only 0) II and \"I d) land "I 1.23 Read the following extract and answer the question that follows. (4 marks) \"The Ford Motor Company says it will increase its presence in South Africa, with plans to invest R158 billion and create 1,200 jobs in the coming years. This investment is the largest the US automaker has made in South Africa in its 97-year history in the country, the group said in a media brieng on Tuesday (2 February). Ford said that the manufacturing investments will go toward the production of its Ford Ranger bakkie one of the top selling vehicles in South Africa, and regionally.\" Source: htt s:fibusinesstech.co.zafnewsimotorin l464962lford-to-investr'l5-8billion-in-south-africa- and-create-iZOO-iobs/ Accessed: 1610221 Which of the following determines whether companies like The Ford Motor Company invests in a country like South Africa? |. The level of risk and uncertainty with the investment II. The level of income in the economy in their domestic market (USA) \"I. The general level of prices in South Africa a) | only b) ll only 0) | and II d) I, II and I\" 1.24 To concede that there is a minimum level which interest rates cannot fall below is a notion brought forth by... (4 marks) a) Marxist economics b) Keynesian economics c) The Free market school d) Structuralist view of ination 1.25 Read the following extract and answer the question that follows. (4 marks) \"Updated minimum wage In a gazette published on Monday evening (8 February), the minister said that the national minimum wage is now R2169 for each ordinary hour. This change will take effect from 1 March 2021 .The gazette also provides exceptions for a number of worker groups Farmworkers are entitled to a minimum wage of R21_69 per hour; Domestic workers are entitled to a minimum wage of R1909 per hour; Workers employed on an expanded public works programme are entitled to a minimum wage of R1193 per hour." Source: https:l/businesstech.co.zaewsance/468206/warningoversouthafricasupdated minimum-wage-coming-inmarchl Accessed: 16/02/21 The content of the above quoted gazette is an example of... I. Market participation ||_ Taxation |||. Regulation a) | only b) H only c) | and H d) I, II and Ill