ECO 112 2019 - Tutorial Set 1 0 PDF

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DEPARTMENT OF ECONOMICSECO 112 BASIC MACROECONOMICSTUTORIAL QUESTIONSTOPIC-1.1 the functions of the two main players in a closed economy, with no government. 2 the role of the government in a three-sector closed economy. 3 advantages do open economies enjoy as compared to closed ones? 4 to the circu...

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DEPARTMENT OFECONOMI CS ECO 112BASI C MACROECONOMI CS TUTORI ALQUESTI ONS TOPI C1. 0 1.Di scusst hef unct i onsoft het womai n pl ayer si n acl osedec onomy ,wi t h nogover nment . 2.Di scusst her ol eoft hegov er nmenti nat hr eesec t orcl osedec onomy . 3.Whatadvant agesdoopeneconomi esenj oyascompar edt ocl osedones ? 4.Re f e r r i ngt ot heci r cul arflow di agr am i ndi cat ewhat18andBD r epr esent si nt hedi agr am bel ow assumi ngAi shous ehol dsandC i s Busi ness:

5.Descr i bet heact i vi t i es/flowst hatt akepl acei nt her esour cemar keti na t wosect or ,cl osedeconomy ,wi t hnogover nment . 6.Descr i bet heact i vi t i es/flowst hatt akepl ac ei nt hepr oductmar keti na t wosect orcl osedeconomy ,wi t hnogover nment . 7.Di st i ngui sh bet wee nt he r esour ce mar ke tand pr oductmar keti nt he ci r cul arflow model .I n whatwayar ebusi nessesand househol dsbot h sel l er sandbuyer si nt hi smodel ? Whatar et heflowsi nt heci r cul arflow mode l ? 8.Whatar et het hr eepr i marymeas ur esusedi nmacr oeconomi cst oassess t heper f or manceofaneconomy? 9.Expl ai nt hei mpor t anceofnat i onali ncomeaccount i ngi naneconomy 10. Di st i ngui sh bet ween t he i ncome and expendi t ur e appr oaches t ot he measur ementofnat i onali ncome

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11. Byusi ngt heci r cul arflow mode l( f orc l osedeconomywi t hnogov er nment par t i ci pat i on/spendi ng; and f or t he ec onomy wi t h gov er nment par t i ci pat i on and f or ei gn sect or ) , expl ai n why we can use bot ht he i ncomeand t heexpendi t ur eappr oac ht o measur enat i onalout putofa count ry . 12. Whati sGDP?Whydowet akei nt oaccountt hemar ketval ueofal lfinal goodsand ser vi cespr oduced i nt hec ount rywhi l ecomput i ngGDP ofa count ry? 13. Gi ve exampl es ofpur el y financi alt r ansac t i ons and expl ai n why t hose t r ansact i onsar eexcl udedf r om t hecal cul at i onofGDP 14. What does doubl e count i ng mean? Expl ai n,by gi vi ng exampl e,how doubl ecount i ngi sav oi dedi nnat i onali ncomeaccount i ng. 15. Makeoutt hedi st i nct i onbet weent hef ol l owi ng: a) b) c) d)

GDPandGNP GDPandNDP Nat i onali ncome,Per sonalI ncomeandDi s posabl eI ncome Gr oss Pr i vat e Domes t i cI nvest mentand NetPr i vat eDomest i c I nvest me nt e) Netf or ei gnf act ori ncomeear ned f ) Consumpt i on offixed capi t al /depr eci at i on cos t s/ r epl acement cost 16. I fweass ume t hati nt he year2016,t he GDP ofBot swana wasP 125 bi l l i onandt heNDPwasP105bi l l i on.Whataccount sf ort hi sdi ffer ence ? 17. When wesayt hatnat i onali ncomei st hei ncomeear ned and per sonal i ncomei st hei ncomer ec ei ved,how doest hi smaket hedi ffer ence? 18. Br i efly di scuss t he pr obl ems i nt he pr epar at i on of nat i onali ncome account sofacount ry 19. Di scusst hepr obl emsofusi ngGDPasameasur eofnat i on’ swel f ar e 20. Bel ow i st hel i stofhypot het i calfigur esr el at i ngt odomest i cout putand i ncomeofacount ryf ort heyear2015

Al lfigur esar ei n mi l l i on Pul a.Cal cul at eGDP byexpendi t ur eand i ncome met hod and al so der i ve NDP,Nat i onali nc ome,Per sonal i ncomeandDi s posabl ei ncome. Per sonalconsumpt i on

245

Gover nmentconsumpt i on

72

Ne tPr i vat eDomest i cI nves t ment

33

Expor t s

32

I mpor t s

21 2

Consumpt i onoffixedcapi t al / Depr eci at i onofcapi t al / Capi t alr epl acementcost

27

I ndi r ectBusi nessTaxes/Taxes onpr oduct i onandi mpor t s

18

Ne tFor ei gnFac t orI ncomee ar ned

16

Tr ansf erpayment s

12

Rent

14

Soci alSecur i t ycont r i but i ons

20

I nt er es t

13

Pr opr i et or s’i ncome

33

Di vi dends

16

Compensat i onofempl oyees–Wages

223

Undi st r i but edcor por at epr ofit s

21

Per sonalt axes

26

Cor por at ei ncomet axes

19

Cor por at epr ofit s( di vi de nds+cor por at e i ncomet axes+undi st r i but edc or por at e pr ofit s)

St at i st i caldi scr epancy 21.

56

20

Definene texpor t s

22. De scr i be t he di ffer ence be t ween r ealGDP and nomi nalGDP. Whi c h concepti smor euse f ulf ormeasur i ngchangei nt heeconomyovert i me? Why? 23. As s ume t hat a pai nt e r pr oduc e s 20 pai nt i ngs t hi s ye ar and 20

pai nt i ngsne xtyear .Whati st heannualc hangei nno mi nalGPD i ft he pr i c eofpai nt i ngsr i s e sf r om P1, 000t hi sye art oP1, 500ne xtye ar ?Can yo uc onc l udet hatt hee c o nomygr e wf r om t hi sye art one xtye arbas ed o nyourans wer ?Why? 24. Whenwi l lt heRealGDPbehi ghert hanNomi nalGDP? 25. ( KeyQuest i on)Thef ol l owi ngt abl eshowsnomi nalGDPandan appr opr i at epr i cei ndexf oragr oupofsel ect edyear s.Comput er ealGDP. I ndi cat ei neachcal cul at i onwhe t heryouar ei nflat i ngordeflat i ngt he nomi nalGDPdat a.

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Year

Nomi nalGDP, Pr i cei ndex Bi l l i ons ( 2000=100)

RealGDP, Bi l l i ons

1974 1984

P663. 6 1500. 0

22. 13 34. 73

P______ P______

1994 2004 2014

3933. 2 7072. 2 11734. 3

67. 66 90. 26 109. 10

P______ P______ P______

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