Exam 2018 Flashcards
Which ONE of the following is NOT a deduction from the value of GDP required to derive personal disposable income?
a. Depreciation
b. Indirect taxes
c. Personal income taxes
d. Savings
e. None of the above
d. Savings
The current account in South Africa’s balance of payments accounts includes
a. Exports of platinum and South African made motor vehicles.
b. Imports of Chinese T shirts and Apple iphones.
c. Interest and dividend receipts and payments.
d. Both a and b.
e. All of the above.
e. All of the above.
Which of the following statements is/are correct? In the balance of payments accounts
a. the current account balance is always equal to the capital account balance.
b. the difference between the current and capital accounts is equal to the change in foreign exchange reserves.
c. the current account measures exports and imports while the capital account measures dividend and interest flows.
d. the current account measures exports and imports as well as dividend and interest flows.
e. Both b and d are correct.
e. Both b and d are correct.
Which ONE of the following variables is NOT a flow variable?
a. A nation’s trade surplus.
b. The government budget deficit.
c. National reserves.
d. One year’s savings by a household from its disposable income.
e. GDP.
c. National reserves.
“Interest rates are generally pro-cyclical” means
a. Interest rates tend to fall during periods of high economic growth.
b. Interest rates tend to fall during periods of high economic growth and rise during periods of slow growth.
c. Interest rates tend to rise during periods of high economic growth and fall during periods of slow growth.
d. Changes in interest rates are determined by the Central Bank and are unrelated to changes in the business cycle.
e. Rising interest rates cause economic growth.
c. Interest rates tend to rise during periods of high economic growth and fall during periods of slow growth.
Which of the following statements is TRUE
a. Business cycles are a type of fluctuation found in the aggregate economic activity.
b. Business cycles are recurrent i.e. they occur again and again.
c. Business cycles are not periodic i.e. do not occur at regular, predictable intervals.
d. Business cycles are persistent i.e. declines are followed by further declines, growth by more growth.
e. All of the above are true.
e. All of the above are true.
Under diminishing marginal product of capital,
a. The return to capital decreases as population grows.
b. In steady state, each country will consume according to its golden rule.
c. Net investment is larger for the countries far a way from their own steady state.
d. The increase of output associated with a unit increase of capital is getting smaller as the capital stock increases
e. Both c and d are correct.
d. The increase of output associated with a unit increase of capital is getting smaller as the capital stock increases
The Human Development Index (HDI)
a. Is not correlated with the level of total factor productivity across countries
b. Includes income per capita, life expectancy and the inflation rate
c. Is strongly positively correlated with GDP per capita across countries
d. Measures sustainable growth
e. Explains conditional convergence.
c. Is strongly positively correlated with GDP per capita across countries
Suppose that the Solow model with technological progress describes the evolution of a country. Then the public policies aiming at increasing the savings rate will:
a. Increase the growth rate of the economy in the steady state.
b. Increase the growth rate of the GDP per person in the steady state.
c. Generate perpetual growth.
d. Increase the level of GDP in the steady state.
e. Increase the growth rate of the total factor productivity.
d. Increase the level of GDP in the steady state.
Which ONE of the following describes the ‘Solow Residual’?
a. The share of GDP growth that is NOT explained by the growth in labour hours and capital.
b. The share of GDP growth that is NOT explained by technological progress.
c. The share of GDP explained by the growth in labour hours and capital.
d. The share of GDP growth NEITHER explained by the growth of inputs, NOR technological progress.
e. The share of GDP that remains after deducting consumption, government spending, and net exports.
a. The share of GDP growth that is NOT explained by the growth in labour hours and capital.
The fundamental disincentive for private producers to produce costly new knowledge is the ___________ characteristic of knowledge.
a. Non-excludability.
b. Rivalrous.
c. Learning by doing.
d. Negative externalities generated by knowledge.
e. All of the other answers given are correct.
a. Non-excludability.
Which of the following characteristics are most likely found in developing countries?
a. High population growth rates.
b. Large number of people living in poverty.
c. Very traditional methods of agricultural production.
d. All of the above
e. None of the above
d. All of the above
Labour productivity is higher in Developed Countries (DCs) such as Japan and Germany than in Least Developed Countries (LDCs) due to
a. Higher formal education and training.
b. Better health and physical condition of the labour force.
c. Better physical infrastructure.
d. Both a and b are correct.
e. None of the above is correct.
d. Both a and b are correct.
When does involuntary unemployment exist?
a. When unemployed workers could be hired for jobs that are different from the job for which they have been specifically trained.
b. When unemployed workers would be willing to work, but only for a wage that is above that being paid to employed workers.
c. When unemployed workers would be willing to work for the wage paid to employed workers or even for a lower wage but don’t find employment.
d. When employers are faced with a shortage of workers that is completely independent of the wages that the employers would be willing to pay them.
e. All of the above are true.
c. When unemployed workers would be willing to work for the wage paid to employed workers or even for a lower wage but don’t find employment.
Which ONE of the following is true of the minimum wage?
a. It is a source of unemployment should it exceed the productivity of unskilled workers.
b. The important point is that you can legislate the wage, but you cannot force employers to hire people, and they will only hire as long as the productivity of a worker does not fall below the wage paid.
c. It provides protection for the least skilled workers.
d. It is set to maximize employment.
e. Both a and b.
e. Both a and b.
