237 Questions
What does GNI (Gross National Income) account for?
All income earned by a country's residents, adjusting for income received from abroad
What is the formula for the multiplier in a simple two-sector model?
k = 1 / (1 - MPC)
What characterizes the contraction phase of a business cycle?
Businesses start to slow down production, reduce workforce, and consumer spending decreases
What is the peak of a business cycle?
The highest point of the business cycle
Which theory explains business cycles due to changes in aggregate demand?
Keynesian Theory
What is the purpose of monetary policy?
To stabilize economic activity
What is the role of fiscal policy during economic downturns?
To stimulate borrowing and investment
What is the main factor influencing business cycles according to Schumpeterian Theory?
Technological innovations
What is the lowest point of a business cycle?
The trough
What is the purpose of prices in national income accounting?
To categorize into Basic Prices, Factor Cost, and Market Prices
What is the primary goal of directing government spending towards public goods and services?
To encourage economic growth and stability
What does the Laffer Curve illustrate?
The relationship between tax rates and tax revenue
What is a potential consequence of price controls?
Shortages or surpluses
What is a challenge faced by the public sector in South Africa?
Efficiency, accountability, and proper needs assessment
What is a result of bureaucracy in the public sector?
Stifling innovation and responsiveness
What is the primary function of the public sector in South Africa?
To manage resources and provide essential services
What is the primary purpose of the circular flow model in an open economy?
To illustrate the economic activities and interactions among various sectors
Which sector of the economy provides labor and resources?
Households
What is the primary function of the financial market?
To manage the flow of money
What is the term for the movement of goods and services?
Real Flows
What is the primary function of the government in the circular flow model?
To collect taxes and inject spending into the economy
What is the term for the total economic output at market prices?
Gross Domestic Product
What is the primary function of the foreign sector in the circular flow model?
To facilitate international trade
Which market deals in resources like labor and capital?
Factor Market
What is the primary objective of the New Economic Paradigm?
To smooth out the volatility in business cycles and achieve stable growth
What type of economic indicators confirm trends that are already in process?
Lagging Indicators
What is the primary function of Provincial Governments?
Managing regional issues, funded by both national budget and their own tax revenues
Why is the public sector essential?
To provide structure and essential services that are not profit-driven
What is a challenge faced by the public sector?
All of the above
What is the primary objective of public sector budgets?
To plan over a three-year period
What is a fiscal policy instrument used to manage economic activity?
Taxation
What is the primary focus of supply-side policies?
Increasing productivity and efficiency
What is the purpose of forecasting business cycles?
To predict future economic activity
What is a challenge faced by State-Owned Enterprises (SOEs)?
All of the above
What is the primary objective of the New Economic Paradigm?
To smooth out the volatility in business cycles and achieve stable growth
What is the primary function of Provincial Governments?
To manage regional issues
What is the primary focus of supply-side policies?
To increase productivity and efficiency
What type of economic indicators predict future economic activity?
Leading indicators
What is the primary objective of forecasting business cycles?
To mitigate the adverse effects of downturns and capitalize on periods of growth
What is a challenge faced by the public sector?
All of the above
What is the primary objective of public sector budgets?
To plan and allocate resources strategically over a three-year period
What is a fiscal policy instrument used to manage economic activity?
Taxation
What is a challenge faced by State-Owned Enterprises (SOEs)?
Inefficiency due to lack of competition
Why is the public sector essential?
To provide essential services that are not profit-driven
What is the primary purpose of the multiplier effect?
To understand how initial increases in spending lead to a more significant overall increase in economic output
What is the name of the model that focuses on household and firm interactions?
Two-Sector Model
What is the phase of a business cycle marked by an increase in economic activities?
Expansion
What type of factors influence business cycles according to Keynesian Theory?
Changes in aggregate demand
What is the name of the theory that focuses on the role of technological innovation in causing business cycles?
Schumpeterian Theory
What is the primary goal of fiscal policy during economic downturns?
To stimulate demand and pull the economy out of a recession
What is the purpose of prices in national income accounting?
To measure economic output
What is the term for the total economic output at market prices?
GDP
What is the primary purpose of understanding business cycles?
For planning and forecasting in economic policy, business strategy, and investment decisions
What is the name of the phase that marks the highest point of economic activity?
Peak
What is the primary role of households in the circular flow model?
To receive income and spend on consumption and savings
Which market is responsible for managing the flow of money?
Financial Market
What is measured by the Gross Domestic Product (GDP)?
The total economic output at market prices
What is the term for the movement of money in the circular flow model?
Money Flows
Which sector is involved in trade activities, where exports add to the economic flow and imports lead to outflows of currency?
Foreign Sector
What is the purpose of the circular flow model in an open economy?
To illustrate the economic activities among various sectors and their interactions through markets
What is the primary goal of directing government spending towards public goods and services?
To encourage economic growth and stability
Which market deals in consumer goods and services?
Goods Market
What is the main limitation of administered prices?
Lead to shortages or surpluses
What is the term for the total economic output?
Gross Domestic Product (GDP)
What is a consequence of information failure in the public sector?
Inefficient outcomes
What is the primary function of the public sector in South Africa?
To manage resources and provide services not suitable for private sector delivery
What is the relationship between tax rates and tax revenue illustrated by the Laffer Curve?
Optimal tax rate that maximizes revenue
What is a potential challenge faced by the public sector?
All of the above
What is the primary function of the goods market in the circular flow model?
To trade consumer goods and services
What is the main difference between real flows and money flows in the circular flow model?
Real flows involve the movement of goods and services, while money flows represent the financial transactions for these goods and services
Which sector of the economy is responsible for injecting spending into the economy through public services and infrastructure?
Government
What is the primary function of the foreign exchange market in the circular flow model?
To handle the trading of currencies necessary for international trade
What is the primary purpose of the circular flow model in an open economy?
To illustrate the economic activities among various sectors and their interactions through markets
Which market deals in resources like labor and capital?
Factor Market
What is the primary purpose of measuring the economic performance through different metrics, such as GDP?
To understand the national account aggregates and conversions
What is the relationship between the household and firm sectors in the circular flow model?
Households provide labor and resources, and firms utilize them to produce goods and services
What is the primary goal of directing government spending towards public goods and services?
To encourage economic growth and stability
What is a potential consequence of administered prices?
Shortages or surpluses, depending on the price set
What is the main reason for the public sector's failure in South Africa?
All of the above
What is the Laffer Curve used to illustrate?
The relationship between tax rates and tax revenue
What is the primary function of the public sector in South Africa?
To manage resources and provide services that are not suitable for private sector delivery
What is a consequence of bureaucracy in the public sector?
Stifling innovation and responsiveness
What is the main difference between the Two-Sector Model and the Three and Four-Sector Models?
The inclusion of government and foreign transactions
Which of the following is a characteristic of the expansion phase of a business cycle?
Increase in economic activities
What is the primary role of Marginal Propensities to Consume (MPC) in the Multiplier Effect?
To influence spending adjustments
Which theory explains business cycles as driven by external shocks and normal market processes?
Classical and Neoclassical Theories
What is the purpose of government policy in relation to business cycles?
To smooth out business cycles
What is the name of the economic indicator that accounts for all income earned by a country's residents?
Gross National Income (GNI)
Which phase of a business cycle is marked by a decline in economic indicators?
Contraction phase
What is the primary purpose of the Multiplier Effect in economics?
To reveal how initial increases in spending lead to a more significant overall increase in economic output
Which type of factors influence business cycles according to Schumpeterian Theory?
Technological innovations
What is the primary goal of fiscal policy during economic downturns?
To reduce taxes and stimulate demand
What is the main objective of the New Economic Paradigm?
To smooth out the volatility in business cycles and achieve stable growth
Which type of economic indicators move with the economy, indicating the current state of economic affairs?
Coincident indicators
What is the primary function of the public sector in South Africa?
To provide essential services and structure to the economy
What is the primary focus of supply-side policies?
To increase productivity and efficiency through technological advancements
What is the primary objective of forecasting business cycles?
To prepare for economic fluctuations and mitigate their adverse effects
What is the primary challenge faced by State-Owned Enterprises (SOEs)?
Lack of competition and accountability
What is the purpose of the Medium-Term Expenditure Framework (MTEF)?
To plan for public sector expenditure over a three-year period
What is the primary objective of public sector budgets?
To promote sustainable economic growth through various sectoral supports
Which type of economic indicators predict future economic activity?
Leading indicators
What is the primary challenge faced by the public sector in South Africa?
All of the above
What is a potential outcome of subsidies and taxes if not carefully managed?
Inefficiencies and distortions in market operations
What is the primary objective of directing government spending towards public goods and services?
To encourage economic growth and stability
What is the purpose of categorizing prices into Basic Prices, Factor Cost, and Market Prices?
To compare the production, income, and expenditure methods
What is the multiplier effect used to reveal?
How initial increases in spending lead to a more significant overall increase in economic output
What is a consequence of information failure in the public sector?
Inefficient outcomes
Which model focuses on household and firm interactions?
Two-Sector Model
What does the Laffer Curve suggest about the relationship between tax rates and tax revenue?
There is an optimal tax rate that maximizes revenue
What characterizes the expansion phase of a business cycle?
An increase in economic activity
What is a challenge faced by the public sector in South Africa?
Efficiency and accountability
Which theory explains business cycles due to changes in aggregate demand?
Keynesian Theory
What is the role of the public sector in South Africa?
To manage resources and provide essential services
What is the purpose of monetary policy?
To stabilize economic activity
What is the primary goal of fiscal policy during economic downturns?
To stimulate demand and pull the economy out of a recession
Which theory focuses on the role of technological innovation in causing business cycles?
Schumpeterian Theory
What is the primary objective of the New Economic Paradigm?
To smooth out the volatility in business cycles and achieve stable growth
What is the primary purpose of understanding business cycles?
For planning and forecasting in economic policy, business strategy, and investment decisions
What type of economic indicators predict future economic activity?
Leading indicators
What is the primary focus of supply-side policies?
Increasing productivity and efficiency
What is the trough of a business cycle?
The lowest point, marking the end of a recession before a new expansion begins
What is the primary function of the goods market in the circular flow model?
To trade consumer goods and services
What is the primary objective of the circular flow model in an open economy?
To illustrate the economic activities among various sectors and their interactions through markets
What is the primary objective of public sector budgets?
To allocate resources strategically
What is a challenge faced by the public sector?
All of the above
What is the primary function of the financial market in the circular flow model?
To manage the flow of money, including savings and investments
What is the term for the total economic output at market prices?
Gross Domestic Product
What is the primary function of Provincial Governments?
Managing regional issues
Why is the public sector essential?
To fulfill social responsibilities
What is the primary function of the foreign sector in the circular flow model?
To involve trade activities, where exports add to the economic flow and imports lead to outflows of currency
What is the primary function of households in the circular flow model?
To provide labor and resources, receiving income used for consumption, savings, and taxes
What is the primary goal of forecasting business cycles?
To mitigate the adverse effects of downturns
What is the term for the movement of goods and services in the circular flow model?
Real Flows
What is a challenge faced by State-Owned Enterprises (SOEs)?
Lack of competition and accountability
What is the primary function of the government in the circular flow model?
To collect taxes and inject spending into the economy through public services and infrastructure
What is a fiscal policy instrument used to manage economic activity?
Taxation
Which sector in the circular flow model is responsible for injecting spending into the economy through public services and infrastructure?
Government
What type of flows involve the movement of goods and services in the circular flow model?
Real Flows
What is the term for the total economic output at market prices?
Gross Domestic Product (GDP)
In the circular flow model, which market deals in resources like labor and capital?
Factor Market
What captures the extent to which additional spending can amplify economic activity in the circular flow model?
Multiplier Effect
Which sector in the circular flow model provides labor and resources?
Households
What manages the flow of money, including savings and investments, via institutions like banks?
Financial Market
What facilitates trade activities, where exports add to the economic flow and imports lead to outflows of currency?
Foreign Sector
Which of the following best describes the focus of the Three and Four-Sector Models in economics?
Government transactions and foreign trade
What is the primary distinguishing feature of the contraction phase of a business cycle?
Declining economic indicators, such as GDP and employment
Which theory explains business cycles as driven by external shocks and normal market processes?
Classical and Neoclassical Theories
What is the primary goal of monetary policy in stabilizing economic activity?
To control inflation through interest rates and money supply
What is the primary role of technological innovation in causing business cycles, according to Schumpeterian Theory?
It causes bursts of activity followed by periods of adjustment
What is the primary purpose of prices in national income accounting?
To categorize income into basic, factor cost, and market prices
What is the primary role of government spending in fiscal policy during economic downturns?
To increase government spending and reduce taxes
What is the primary focus of Keynesian Theory in explaining business cycles?
Changes in aggregate demand influenced by collective behavior
What is the primary limitation of administered prices?
They can result in shortages or surpluses depending on whether prices are set below or above market equilibrium.
What is the primary reason for government spending on public goods and services?
To provide essential services that the private sector cannot deliver efficiently.
What is the primary goal of forecasting business cycles?
To predict future economic activity and plan accordingly
What is the main implication of bureaucracy in the public sector?
It can stifle innovation and responsiveness.
What is the primary challenge faced by the public sector in South Africa?
Efficiency and accountability.
What is the primary objective of directing government spending towards public goods and services?
To stimulate economic growth and stability.
What is the primary implication of information failure in the public sector?
It can result in inefficient outcomes due to incomplete or inaccurate information.
What is the primary objective of the New Economic Paradigm?
To smooth out the volatility in business cycles and achieve stable growth
Which of the following is a characteristic of supply-side policies?
Increase productivity and efficiency through technological advancements
What is the primary function of the public sector in South Africa?
To provide essential services that are not profit-driven
Which of the following is a challenge faced by State-Owned Enterprises (SOEs)?
Inefficient use of resources due to lack of competition
What is the primary objective of forecasting business cycles?
To predict future economic activity and prepare for economic fluctuations
Which of the following is a type of economic indicator that predicts future economic activity?
Leading indicators
What is the primary focus of demand-side policies?
Regulating aggregate demand through fiscal stimuli or monetary adjustments
What is the primary objective of public sector budgets?
To allocate resources strategically and achieve sectoral supports
Which of the following is a challenge faced by the public sector in South Africa?
Assessing the needs of the population accurately
What is the primary function of Provincial Governments?
To manage regional issues, funded by both national budget and their own tax revenues
Which sector of the circular flow model involves trade activities, exporting goods and services, and importing goods and services, leading to inflows and outflows of currency?
Foreign Sector
What is the primary function of the financial market in the circular flow model?
To manage the flow of money and facilitate savings and investments
What is measured by the Gross Domestic Product (GDP)?
The total economic output at market prices
What is the term for the movement of goods and services in the circular flow model?
Real Flow
Which market facilitates the trade of consumer goods and services?
Goods Market
What is the primary function of households in the circular flow model?
To provide labor and resources to firms
What is the term for the financial transactions that accompany the real flow of goods and services?
Money Flow
What is the primary function of the government in the circular flow model?
To collect taxes and inject spending into the economy
Which of the following statements is true about the Marginal Propensities to Consume (MPC) and Save (MPS)?
MPC + MPS = 1, where MPC is the proportion of income spent and MPS is the proportion saved
What is the primary objective of fiscal policy during economic downturns?
To stimulate economic activity by increasing government spending and reducing taxes
Which theory explains business cycles due to external shocks and normal market processes?
Classical and Neoclassical Theories
What is the primary function of prices in national income accounting?
To categorize into Basic Prices, Factor Cost, and Market Prices
Which sector of the economy provides labor and resources, and receives income?
Household Sector
What is the primary focus of supply-side policies?
To reduce taxation and promote economic growth
What is the primary objective of the New Economic Paradigm?
To smooth out the volatility in business cycles and achieve stable growth
Which phase of the business cycle is marked by a decrease in economic activity?
Contraction
What is the primary objective of the multiplier effect?
To illustrate the impact of initial increases in spending on economic output
Which type of economic indicators predict future economic activity?
Leading Indicators
What is the name of the model that focuses on household and firm interactions, with spending adjustments influenced by the Marginal Propensities to Consume (MPC) and Save (MPS)?
Two-Sector Model
What is the primary focus of supply-side policies?
Increasing productivity and efficiency through technological advancements
What is the primary function of monetary policy?
To control inflation and stabilize economic activity through interest rates and money supply
What is the primary objective of public sector budgets?
To allocate resources strategically over a three-year period
What is the primary function of Provincial Governments?
Managing regional issues, funded by both national budget and their own tax revenues
What is a challenge faced by the public sector?
Inefficiency due to lack of clear performance metrics and accountability
What is a fiscal policy instrument used to manage economic activity?
Taxation
Why is the public sector essential?
To provide structure and essential services that are not profit-driven
What is a challenge faced by State-Owned Enterprises (SOEs)?
Inefficiency due to lack of competition and accountability
What is the primary focus of forecasting business cycles?
Mitigating the adverse effects of downturns and capitalizing on periods of growth
What is the primary objective of directing government spending towards public goods and services?
To encourage economic growth and stability
What is the primary challenge faced by the public sector in South Africa?
Inefficiency and accountability
What is the potential consequence of price controls in the economy?
Shortages or surpluses
What is the primary function of the Laffer Curve?
To show the optimal tax rate that maximizes revenue
What is the primary consequence of information failure in the public sector?
Inefficient outcomes
What is the primary role of the public sector in South Africa?
To provide goods and services that are not suitable for private sector delivery
What is the primary function of households in the circular flow model?
To provide labor and resources
What is the term for the flow of financial transactions in the circular flow model?
Money Flows
Which market facilitates the trading of currencies necessary for international trade?
Foreign Exchange Market
What is the primary function of the government in the circular flow model?
To inject spending into the economy
What is the term for the total economic output at market prices?
Gross Domestic Product
Which sector of the economy involves trade activities, where exports add to the economic flow and imports lead to outflows of currency?
Foreign Sector
What is the term for the movement of goods and services in the circular flow model?
Real Flows
Which market deals with consumer goods and services?
Goods Market
What is a potential consequence of setting administered prices below market equilibrium?
Shortage of goods
What is a challenge faced by the public sector in South Africa related to decision-making?
Information failure
What is the primary objective of directing government spending towards public goods and services?
To provide essential services
What is the Laffer Curve primarily used to illustrate?
The relationship between tax rates and tax revenue
What is a consequence of excessive bureaucracy in the public sector?
Stifling of innovation
What is the primary function of the public sector in South Africa?
To manage resources and provide essential services
What is the primary objective of the New Economic Paradigm?
To smooth out the volatility in business cycles and achieve stable growth
What is the primary focus of supply-side policies?
To increase productivity and efficiency through technological advancements, regulatory reforms, and incentives for industries
What type of economic indicators confirm trends that are already in process?
Lagging Indicators
What is the primary function of Provincial Governments?
To manage regional issues, funded by both national budget and their own tax revenues
What is a challenge faced by the public sector?
Inefficiency due to a lack of clear performance metrics and accountability
What is the primary objective of public sector budgets?
To plan and allocate resources strategically over a three-year period
What is a fiscal policy instrument used to manage economic activity?
Taxation
What type of economic indicators predict future economic activity?
Leading Indicators
What is a challenge faced by State-Owned Enterprises (SOEs)?
Inefficiency due to a lack of competition and accountability
Why is the public sector essential?
To provide structure and essential services that are not profit-driven
What is the primary difference between the two-sector model and three/four-sector models?
Inclusion of government and foreign transactions
Which theory suggests that business cycles are driven by external shocks and normal market processes?
Classical and Neoclassical Theories
What is the result of initial increases in spending according to the multiplier effect?
A more significant overall increase in economic output
What is the term for the phase of a business cycle marked by a decrease in economic activities?
Contraction
What is the primary goal of monetary policy during booms?
To curb inflation
What is the term for the highest point of a business cycle?
Peak
What is the primary difference between endogenous and exogenous factors influencing business cycles?
Endogenous factors arise from within the economic system, while exogenous factors are external
What is the primary goal of fiscal policy during economic downturns?
To stimulate economic activity through increased government spending and reduced taxes
What is the name of the theory that proposes business cycles are due to changes in aggregate demand?
Keynesian Theory
What is the term for the lowest point of a business cycle?
Trough
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
