PART A [8 marks] For each of the following questions, indicate whether the statement is true or false. If the statement is false, briefly explain why. 1. Gross Domestic Product is the market value of all goods and services produced within a country in a given time period. [2 marks] 2. An increase in annual Nominal GDP between two periods, such as 2005 and 2016, can only indicate an improvement in living standards. [2 marks] 3. Nominal GDP is a measure of GDP based on prices in the current year while real GDP is a measure of GDP based on prices in the reference base year. [2 marks] 4. If a consumer buys a second-hand car from her friend, the sale of the car is included in GDP. [2 marks]PART B [32 marks] QUESTION 1 Consider Table 1 below. Table 1: GDP Calculation Items Amount (R Billions) Consumption 1380 Wages 1100 Imports 120 Exports 40 Interest, rent and profit 520 Indirect taxes 140 Subsidies 40 Government Expenditure 380 Investment 320 Depreciation 320 1. With the information in Table 1, calculate GDP using the income approach. Make sure to indicate which items you are using in your calculation. [5 marks] 2. Again using the information in Table 1, calculate GDP using the expenditure approach. Make sure to indicate which items you are using in your calculation. [5 marks]part B continued.... QUESTION 2 1. Explain the difference between Gross National Product and Gross Domestic Product. [2 marks] 2. Name and explain two examples of the limitations of using GDP as a measure of the standard of living. [4 marks] 3. Explain what is meant by "Potential GDP" and "Business Cycles". [2 marks] QUESTION 3 Consider the Circular Flow of Income and Expenditure represented in Figure 1. Figure 1: Circular Flow of Income and Expenditure 2 3 4 7 1. Name, and briefly describe, the component of expenditure and income each number in the figure (1, 2, 3, 4, 5, 6, 7) represents. [14 marks] Page 3