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Section-1: True/False and Explain Questions:

Indicate whether each statement is true or false, and briefly justify your answer.Each question is worth two marks. You should draw a labelled diagram or provide an example to explain your answer, wherever appropriate.

1. The value of a second-hand car would be included in GDP of 2020 if its purchased by firms rather than households in 2020.

1. During COVID-19, a lot of economic activities constituted "work from home"so they will not be included in real GDP for 2020.

1. Macroeconomic policymakers in any country only want to increase real GDP and reduce unemployment without bothering about inflation.

1. Lowering the Official Cash Rate (OCR) in New Zealand would be an example of a contractionary monetary policy.

1. A crowding out effect of an increase in government expenditure would be expansionary in nature, increasing real GDP.

1. Introduction of digital technologies to boost productivity would shift the aggregate supply of an economy only in the short-run.

Section-2:Case study : International comparisons of economic growth and economic wellbeing

(Required to answer Questions 2, 3 and 4)

The following table shows various countries' economic growth rates and rankings on the Human Development Index (HDI). The HDI was developed in 1990 by the United Nations Development Program. It is now calculated and published annually by the World Bank.

Table 1

Country	Average annual economic growth (%) 2010-2014*	Human Development Index Rank 2013
Australia	2.60	2
Brazil	3.23	79
China	8.58	91
Gabon	5.78	112
Germany	1.95	6
Hong Kong	3.77	15
Indonesia	5.81	108
Japan	1.49	17
Singapore	6.44	9
Sudan	1.13	166
United Kingdom	1.69	14
United States	2.21	5
Vietnam	5.86	121

*Average of the five years 2010-2014 inclusive

Sources: World Bank. 2011. 'World Development Indicators 2010' and 'Annual GDP growth'.http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG (table 2); and United Nations Development Programme, 2010. 'Human Development Index Ratings'.http://hdr.undp.org/en/data

Note that the HDI is based on three variables covering several facets of wellbeing:

• longevity (life expectancy at birth)
• education attainment (adult literacy rate and combined gross primary, secondary and tertiary enrolment ratio)
• standard of living (GDP per capita).

Question 2

What do you notice about the differences in average rates of growth and the different HDI rankings for the countries in Table 1? Can you explain this relationship?

Question 3

Based on your observations and analysis of Table 1 and your knowledge of measuring national output, do you think it is a good idea to compare economic growth rates across countries ? Justify your answer.

Question 4

What measures (other than GDP) would you use to compare economic wellbeing among these countries? Explain your answer.