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1.1 Double counting can be avoided when computing GDP by: a) simply deducting a double-counting factor from the GDP estimates. b) adding the value of only the intermediate (non-final) goods and services produced. c) adding only the value contributed by firms at each stage of production. d) including the value of all output produced in the economy. 1.2 Which of the following conditions would not be studied by the macroeconomist? a) The level of national unemployment during 1988 b) The effect of government economic policy on the inflation rate during 1987 . c) The effect of changing petroleum prices on the demand for coal, d) The effect of lower income taxes on the rate of economic growth. Read the following extract and answer questions 1.3 - 1.5. "Illegal car imports cost the taxman as much as R8bn Kia MD Gary Scott says about 55,000 of the illegal imports slip into SA every year, more than the number of new vehicles sold every month An estimated 440,000 illegally imported, used cars are travelling regularly on SA roads, costing the exchequer up to R8bn in lost taxes and posing a major risk to road safety, Kia SA MD Gary Scott said on Tuesday. He blamed slack regulations for the fact that about 55,000 "grey" imports, as they are known, slip into SA each year. That's more than the number of new vehicles sold every month..." The problem being illustrated in the above extract regarding the use of gross domestic product as a measure of economic performance is... (4 marks). a) Data revision b) Economic welfare c) Unrecorded activity d) Non-market production 1.4 The reason that illegally imported used cars are not accounted for in the measure of GDP is because they violate which element of GDP? a) Market value. (4 marks) b) Final goods and services. c) Economy. d) Specific time period. 1.5 Which method of calculating GDP do illegally imported used cars distort? (4 marks) a) Production method. b) Income method. c) Value added method. d) Expenditure method. 1.6 Read the following extract and answer questions 1.61.9. "The European Central Bank is expected to set aside recession worries and deliver another jumbo interest rate hike this week to cool inflation, as Russia's war on Ukraine sends energy prices soaring. Inflation in the 19-nation Eurozone climbed to an all-time high of nearly 10% in September, five times the ECB's target of two percent. The ECB's governing council last month raised its key interest rates by an unprecedented 75 basis points, and many observers expect it to repeat the move at Thursday's meeting." The view of the inflation process being expressed in the above quote is: (4 marks) a) The monetarist approach to inflation b) Cost push inflation c) Demand push inflation d) The conflict approach 1.7 By hiking interest rates, the European Central Bank is aiming to achieve: a) Price stability b) Economic growth c) Full employment d) Balance of payments stability 1.8 The view being reported in the extract of how the European Central Bank will deal with inflation is... a) Classical economics b) Keynesian economics c) The monetarist approach d) The structuralist approach 1.9 In order to cool inflation, according to the extract, the European Central Bank will make use of: a) Quantitative easing b) Restrictive monetary policy c) Increase government spending d) Raise taxes 1.10 Read the following extract and answer questions 1.10 and 1.11. "South Africa has banned Bain \& Company from bidding for public-sector contracts for a decade, following the lead of the UK, after the consulting firm was accused of helping government officials degrade the South African Revenue Service's (SARS) ability to probe tax evasion. National treasury said in a response to queries that the ban will last for a decade and relates to the company "engaging in corrupt and fraudulent practices related to a SARS contract". The UK in August banned Bain from public contracts for three years because of allegations related to SARS. Bain was found by a judicial commission to have had ties to illegal dealings during work restructuring Sars, where senior staff were ousted and the institution's investigative capacity was gutted.' The economic problem shown in the extract is that of and has the consequence of (4 marks) a) Market failure, externalities. b) Government failure, public goods being underproduced. c) Market failure, inefficient allocation of resources. d) Government failure, public goods being overproduced