June P1 Mix
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Questions and Answers

What does GNI (Gross National Income) account for?

  • Only income earned from exports
  • Only income earned by foreigners
  • Only income earned within a country
  • All income earned by a country's residents, adjusting for income received from abroad (correct)

    • What is the formula for the multiplier in a simple two-sector model?

  • k = MPC / (1 - MPC)
  • k = 1 - MPC
  • k = 1 / MPC
  • k = 1 / (1 - MPC) (correct)

    • What characterizes the contraction phase of a business cycle?

  • Businesses start to slow down production, reduce workforce, and consumer spending decreases (correct)
  • Economic indicators such as employment, production, and sales show significant growth
  • The economy sees rising consumer demand, increased factory production, and greater capital investments
  • The economy enters a recession

    • What is the peak of a business cycle?

    <p>The highest point of the business cycle</p> Signup and view all the answers

    Which theory explains business cycles due to changes in aggregate demand?

    <p>Keynesian Theory</p> Signup and view all the answers

    What is the purpose of monetary policy?

    <p>To stabilize economic activity</p> Signup and view all the answers

    What is the role of fiscal policy during economic downturns?

    <p>To stimulate borrowing and investment</p> Signup and view all the answers

    What is the main factor influencing business cycles according to Schumpeterian Theory?

    <p>Technological innovations</p> Signup and view all the answers

    What is the lowest point of a business cycle?

    <p>The trough</p> Signup and view all the answers

    What is the purpose of prices in national income accounting?

    <p>To categorize into Basic Prices, Factor Cost, and Market Prices</p> Signup and view all the answers

    What is the primary goal of directing government spending towards public goods and services?

    <p>To encourage economic growth and stability</p> Signup and view all the answers

    What does the Laffer Curve illustrate?

    <p>The relationship between tax rates and tax revenue</p> Signup and view all the answers

    What is a potential consequence of price controls?

    <p>Shortages or surpluses</p> Signup and view all the answers

    What is a challenge faced by the public sector in South Africa?

    <p>Efficiency, accountability, and proper needs assessment</p> Signup and view all the answers

    What is a result of bureaucracy in the public sector?

    <p>Stifling innovation and responsiveness</p> Signup and view all the answers

    What is the primary function of the public sector in South Africa?

    <p>To manage resources and provide essential services</p> Signup and view all the answers

    What is the primary purpose of the circular flow model in an open economy?

    <p>To illustrate the economic activities and interactions among various sectors</p> Signup and view all the answers

    Which sector of the economy provides labor and resources?

    <p>Households</p> Signup and view all the answers

    What is the primary function of the financial market?

    <p>To manage the flow of money</p> Signup and view all the answers

    What is the term for the movement of goods and services?

    <p>Real Flows</p> Signup and view all the answers

    What is the primary function of the government in the circular flow model?

    <p>To collect taxes and inject spending into the economy</p> Signup and view all the answers

    What is the term for the total economic output at market prices?

    <p>Gross Domestic Product</p> Signup and view all the answers

    What is the primary function of the foreign sector in the circular flow model?

    <p>To facilitate international trade</p> Signup and view all the answers

    Which market deals in resources like labor and capital?

    <p>Factor Market</p> Signup and view all the answers

    What is the primary objective of the New Economic Paradigm?

    <p>To smooth out the volatility in business cycles and achieve stable growth</p> Signup and view all the answers

    What type of economic indicators confirm trends that are already in process?

    <p>Lagging Indicators</p> Signup and view all the answers

    What is the primary function of Provincial Governments?

    <p>Managing regional issues, funded by both national budget and their own tax revenues</p> Signup and view all the answers

    Why is the public sector essential?

    <p>To provide structure and essential services that are not profit-driven</p> Signup and view all the answers

    What is a challenge faced by the public sector?

    <p>All of the above</p> Signup and view all the answers

    What is the primary objective of public sector budgets?

    <p>To plan over a three-year period</p> Signup and view all the answers

    What is a fiscal policy instrument used to manage economic activity?

    <p>Taxation</p> Signup and view all the answers

    What is the primary focus of supply-side policies?

    <p>Increasing productivity and efficiency</p> Signup and view all the answers

    What is the purpose of forecasting business cycles?

    <p>To predict future economic activity</p> Signup and view all the answers

    What is a challenge faced by State-Owned Enterprises (SOEs)?

    <p>All of the above</p> Signup and view all the answers

    What is the primary objective of the New Economic Paradigm?

    <p>To smooth out the volatility in business cycles and achieve stable growth</p> Signup and view all the answers

    What is the primary function of Provincial Governments?

    <p>To manage regional issues</p> Signup and view all the answers

    What is the primary focus of supply-side policies?

    <p>To increase productivity and efficiency</p> Signup and view all the answers

    What type of economic indicators predict future economic activity?

    <p>Leading indicators</p> Signup and view all the answers

    What is the primary objective of forecasting business cycles?

    <p>To mitigate the adverse effects of downturns and capitalize on periods of growth</p> Signup and view all the answers

    What is a challenge faced by the public sector?

    <p>All of the above</p> Signup and view all the answers

    What is the primary objective of public sector budgets?

    <p>To plan and allocate resources strategically over a three-year period</p> Signup and view all the answers

    What is a fiscal policy instrument used to manage economic activity?

    <p>Taxation</p> Signup and view all the answers

    What is a challenge faced by State-Owned Enterprises (SOEs)?

    <p>Inefficiency due to lack of competition</p> Signup and view all the answers

    Why is the public sector essential?

    <p>To provide essential services that are not profit-driven</p> Signup and view all the answers

    What is the primary purpose of the multiplier effect?

    <p>To understand how initial increases in spending lead to a more significant overall increase in economic output</p> Signup and view all the answers

    What is the name of the model that focuses on household and firm interactions?

    <p>Two-Sector Model</p> Signup and view all the answers

    What is the phase of a business cycle marked by an increase in economic activities?

    <p>Expansion</p> Signup and view all the answers

    What type of factors influence business cycles according to Keynesian Theory?

    <p>Changes in aggregate demand</p> Signup and view all the answers

    What is the name of the theory that focuses on the role of technological innovation in causing business cycles?

    <p>Schumpeterian Theory</p> Signup and view all the answers

    What is the primary goal of fiscal policy during economic downturns?

    <p>To stimulate demand and pull the economy out of a recession</p> Signup and view all the answers

    What is the purpose of prices in national income accounting?

    <p>To measure economic output</p> Signup and view all the answers

    What is the term for the total economic output at market prices?

    <p>GDP</p> Signup and view all the answers

    What is the primary purpose of understanding business cycles?

    <p>For planning and forecasting in economic policy, business strategy, and investment decisions</p> Signup and view all the answers

    What is the name of the phase that marks the highest point of economic activity?

    <p>Peak</p> Signup and view all the answers

    What is the primary role of households in the circular flow model?

    <p>To receive income and spend on consumption and savings</p> Signup and view all the answers

    Which market is responsible for managing the flow of money?

    <p>Financial Market</p> Signup and view all the answers

    What is measured by the Gross Domestic Product (GDP)?

    <p>The total economic output at market prices</p> Signup and view all the answers

    What is the term for the movement of money in the circular flow model?

    <p>Money Flows</p> Signup and view all the answers

    Which sector is involved in trade activities, where exports add to the economic flow and imports lead to outflows of currency?

    <p>Foreign Sector</p> Signup and view all the answers

    What is the purpose of the circular flow model in an open economy?

    <p>To illustrate the economic activities among various sectors and their interactions through markets</p> Signup and view all the answers

    What is the primary goal of directing government spending towards public goods and services?

    <p>To encourage economic growth and stability</p> Signup and view all the answers

    Which market deals in consumer goods and services?

    <p>Goods Market</p> Signup and view all the answers

    What is the main limitation of administered prices?

    <p>Lead to shortages or surpluses</p> Signup and view all the answers

    What is the term for the total economic output?

    <p>Gross Domestic Product (GDP)</p> Signup and view all the answers

    What is a consequence of information failure in the public sector?

    <p>Inefficient outcomes</p> Signup and view all the answers

    What is the primary function of the public sector in South Africa?

    <p>To manage resources and provide services not suitable for private sector delivery</p> Signup and view all the answers

    What is the relationship between tax rates and tax revenue illustrated by the Laffer Curve?

    <p>Optimal tax rate that maximizes revenue</p> Signup and view all the answers

    What is a potential challenge faced by the public sector?

    <p>All of the above</p> Signup and view all the answers

    What is the primary function of the goods market in the circular flow model?

    <p>To trade consumer goods and services</p> Signup and view all the answers

    What is the main difference between real flows and money flows in the circular flow model?

    <p>Real flows involve the movement of goods and services, while money flows represent the financial transactions for these goods and services</p> Signup and view all the answers

    Which sector of the economy is responsible for injecting spending into the economy through public services and infrastructure?

    <p>Government</p> Signup and view all the answers

    What is the primary function of the foreign exchange market in the circular flow model?

    <p>To handle the trading of currencies necessary for international trade</p> Signup and view all the answers

    What is the primary purpose of the circular flow model in an open economy?

    <p>To illustrate the economic activities among various sectors and their interactions through markets</p> Signup and view all the answers

    Which market deals in resources like labor and capital?

    <p>Factor Market</p> Signup and view all the answers

    What is the primary purpose of measuring the economic performance through different metrics, such as GDP?

    <p>To understand the national account aggregates and conversions</p> Signup and view all the answers

    What is the relationship between the household and firm sectors in the circular flow model?

    <p>Households provide labor and resources, and firms utilize them to produce goods and services</p> Signup and view all the answers

    What is the primary goal of directing government spending towards public goods and services?

    <p>To encourage economic growth and stability</p> Signup and view all the answers

    What is a potential consequence of administered prices?

    <p>Shortages or surpluses, depending on the price set</p> Signup and view all the answers

    What is the main reason for the public sector's failure in South Africa?

    <p>All of the above</p> Signup and view all the answers

    What is the Laffer Curve used to illustrate?

    <p>The relationship between tax rates and tax revenue</p> Signup and view all the answers

    What is the primary function of the public sector in South Africa?

    <p>To manage resources and provide services that are not suitable for private sector delivery</p> Signup and view all the answers

    What is a consequence of bureaucracy in the public sector?

    <p>Stifling innovation and responsiveness</p> Signup and view all the answers

    What is the main difference between the Two-Sector Model and the Three and Four-Sector Models?

    <p>The inclusion of government and foreign transactions</p> Signup and view all the answers

    Which of the following is a characteristic of the expansion phase of a business cycle?

    <p>Increase in economic activities</p> Signup and view all the answers

    What is the primary role of Marginal Propensities to Consume (MPC) in the Multiplier Effect?

    <p>To influence spending adjustments</p> Signup and view all the answers

    Which theory explains business cycles as driven by external shocks and normal market processes?

    <p>Classical and Neoclassical Theories</p> Signup and view all the answers

    What is the purpose of government policy in relation to business cycles?

    <p>To smooth out business cycles</p> Signup and view all the answers

    What is the name of the economic indicator that accounts for all income earned by a country's residents?

    <p>Gross National Income (GNI)</p> Signup and view all the answers

    Which phase of a business cycle is marked by a decline in economic indicators?

    <p>Contraction phase</p> Signup and view all the answers

    What is the primary purpose of the Multiplier Effect in economics?

    <p>To reveal how initial increases in spending lead to a more significant overall increase in economic output</p> Signup and view all the answers

    Which type of factors influence business cycles according to Schumpeterian Theory?

    <p>Technological innovations</p> Signup and view all the answers

    What is the primary goal of fiscal policy during economic downturns?

    <p>To reduce taxes and stimulate demand</p> Signup and view all the answers

    What is the main objective of the New Economic Paradigm?

    <p>To smooth out the volatility in business cycles and achieve stable growth</p> Signup and view all the answers

    Which type of economic indicators move with the economy, indicating the current state of economic affairs?

    <p>Coincident indicators</p> Signup and view all the answers

    What is the primary function of the public sector in South Africa?

    <p>To provide essential services and structure to the economy</p> Signup and view all the answers

    What is the primary focus of supply-side policies?

    <p>To increase productivity and efficiency through technological advancements</p> Signup and view all the answers

    What is the primary objective of forecasting business cycles?

    <p>To prepare for economic fluctuations and mitigate their adverse effects</p> Signup and view all the answers

    What is the primary challenge faced by State-Owned Enterprises (SOEs)?

    <p>Lack of competition and accountability</p> Signup and view all the answers

    What is the purpose of the Medium-Term Expenditure Framework (MTEF)?

    <p>To plan for public sector expenditure over a three-year period</p> Signup and view all the answers

    What is the primary objective of public sector budgets?

    <p>To promote sustainable economic growth through various sectoral supports</p> Signup and view all the answers

    Which type of economic indicators predict future economic activity?

    <p>Leading indicators</p> Signup and view all the answers

    What is the primary challenge faced by the public sector in South Africa?

    <p>All of the above</p> Signup and view all the answers

    What is a potential outcome of subsidies and taxes if not carefully managed?

    <p>Inefficiencies and distortions in market operations</p> Signup and view all the answers

    What is the primary objective of directing government spending towards public goods and services?

    <p>To encourage economic growth and stability</p> Signup and view all the answers

    What is the purpose of categorizing prices into Basic Prices, Factor Cost, and Market Prices?

    <p>To compare the production, income, and expenditure methods</p> Signup and view all the answers

    What is the multiplier effect used to reveal?

    <p>How initial increases in spending lead to a more significant overall increase in economic output</p> Signup and view all the answers

    What is a consequence of information failure in the public sector?

    <p>Inefficient outcomes</p> Signup and view all the answers

    Which model focuses on household and firm interactions?

    <p>Two-Sector Model</p> Signup and view all the answers

    What does the Laffer Curve suggest about the relationship between tax rates and tax revenue?

    <p>There is an optimal tax rate that maximizes revenue</p> Signup and view all the answers

    What characterizes the expansion phase of a business cycle?

    <p>An increase in economic activity</p> Signup and view all the answers

    What is a challenge faced by the public sector in South Africa?

    <p>Efficiency and accountability</p> Signup and view all the answers

    Which theory explains business cycles due to changes in aggregate demand?

    <p>Keynesian Theory</p> Signup and view all the answers

    What is the role of the public sector in South Africa?

    <p>To manage resources and provide essential services</p> Signup and view all the answers

    What is the purpose of monetary policy?

    <p>To stabilize economic activity</p> Signup and view all the answers

    What is the primary goal of fiscal policy during economic downturns?

    <p>To stimulate demand and pull the economy out of a recession</p> Signup and view all the answers

    Which theory focuses on the role of technological innovation in causing business cycles?

    <p>Schumpeterian Theory</p> Signup and view all the answers

    What is the primary objective of the New Economic Paradigm?

    <p>To smooth out the volatility in business cycles and achieve stable growth</p> Signup and view all the answers

    What is the primary purpose of understanding business cycles?

    <p>For planning and forecasting in economic policy, business strategy, and investment decisions</p> Signup and view all the answers

    What type of economic indicators predict future economic activity?

    <p>Leading indicators</p> Signup and view all the answers

    What is the primary focus of supply-side policies?

    <p>Increasing productivity and efficiency</p> Signup and view all the answers

    What is the trough of a business cycle?

    <p>The lowest point, marking the end of a recession before a new expansion begins</p> Signup and view all the answers

    What is the primary function of the goods market in the circular flow model?

    <p>To trade consumer goods and services</p> Signup and view all the answers

    What is the primary objective of the circular flow model in an open economy?

    <p>To illustrate the economic activities among various sectors and their interactions through markets</p> Signup and view all the answers

    What is the primary objective of public sector budgets?

    <p>To allocate resources strategically</p> Signup and view all the answers

    What is a challenge faced by the public sector?

    <p>All of the above</p> Signup and view all the answers

    What is the primary function of the financial market in the circular flow model?

    <p>To manage the flow of money, including savings and investments</p> Signup and view all the answers

    What is the term for the total economic output at market prices?

    <p>Gross Domestic Product</p> Signup and view all the answers

    What is the primary function of Provincial Governments?

    <p>Managing regional issues</p> Signup and view all the answers

    Why is the public sector essential?

    <p>To fulfill social responsibilities</p> Signup and view all the answers

    What is the primary function of the foreign sector in the circular flow model?

    <p>To involve trade activities, where exports add to the economic flow and imports lead to outflows of currency</p> Signup and view all the answers

    What is the primary function of households in the circular flow model?

    <p>To provide labor and resources, receiving income used for consumption, savings, and taxes</p> Signup and view all the answers

    What is the primary goal of forecasting business cycles?

    <p>To mitigate the adverse effects of downturns</p> Signup and view all the answers

    What is the term for the movement of goods and services in the circular flow model?

    <p>Real Flows</p> Signup and view all the answers

    What is a challenge faced by State-Owned Enterprises (SOEs)?

    <p>Lack of competition and accountability</p> Signup and view all the answers

    What is the primary function of the government in the circular flow model?

    <p>To collect taxes and inject spending into the economy through public services and infrastructure</p> Signup and view all the answers

    What is a fiscal policy instrument used to manage economic activity?

    <p>Taxation</p> Signup and view all the answers

    Which sector in the circular flow model is responsible for injecting spending into the economy through public services and infrastructure?

    <p>Government</p> Signup and view all the answers

    What type of flows involve the movement of goods and services in the circular flow model?

    <p>Real Flows</p> Signup and view all the answers

    What is the term for the total economic output at market prices?

    <p>Gross Domestic Product (GDP)</p> Signup and view all the answers

    In the circular flow model, which market deals in resources like labor and capital?

    <p>Factor Market</p> Signup and view all the answers

    What captures the extent to which additional spending can amplify economic activity in the circular flow model?

    <p>Multiplier Effect</p> Signup and view all the answers

    Which sector in the circular flow model provides labor and resources?

    <p>Households</p> Signup and view all the answers

    What manages the flow of money, including savings and investments, via institutions like banks?

    <p>Financial Market</p> Signup and view all the answers

    What facilitates trade activities, where exports add to the economic flow and imports lead to outflows of currency?

    <p>Foreign Sector</p> Signup and view all the answers

    Which of the following best describes the focus of the Three and Four-Sector Models in economics?

    <p>Government transactions and foreign trade</p> Signup and view all the answers

    What is the primary distinguishing feature of the contraction phase of a business cycle?

    <p>Declining economic indicators, such as GDP and employment</p> Signup and view all the answers

    Which theory explains business cycles as driven by external shocks and normal market processes?

    <p>Classical and Neoclassical Theories</p> Signup and view all the answers

    What is the primary goal of monetary policy in stabilizing economic activity?

    <p>To control inflation through interest rates and money supply</p> Signup and view all the answers

    What is the primary role of technological innovation in causing business cycles, according to Schumpeterian Theory?

    <p>It causes bursts of activity followed by periods of adjustment</p> Signup and view all the answers

    What is the primary purpose of prices in national income accounting?

    <p>To categorize income into basic, factor cost, and market prices</p> Signup and view all the answers

    What is the primary role of government spending in fiscal policy during economic downturns?

    <p>To increase government spending and reduce taxes</p> Signup and view all the answers

    What is the primary focus of Keynesian Theory in explaining business cycles?

    <p>Changes in aggregate demand influenced by collective behavior</p> Signup and view all the answers

    What is the primary limitation of administered prices?

    <p>They can result in shortages or surpluses depending on whether prices are set below or above market equilibrium.</p> Signup and view all the answers

    What is the primary reason for government spending on public goods and services?

    <p>To provide essential services that the private sector cannot deliver efficiently.</p> Signup and view all the answers

    What is the primary goal of forecasting business cycles?

    <p>To predict future economic activity and plan accordingly</p> Signup and view all the answers

    What is the main implication of bureaucracy in the public sector?

    <p>It can stifle innovation and responsiveness.</p> Signup and view all the answers

    What is the primary challenge faced by the public sector in South Africa?

    <p>Efficiency and accountability.</p> Signup and view all the answers

    What is the primary objective of directing government spending towards public goods and services?

    <p>To stimulate economic growth and stability.</p> Signup and view all the answers

    What is the primary implication of information failure in the public sector?

    <p>It can result in inefficient outcomes due to incomplete or inaccurate information.</p> Signup and view all the answers

    What is the primary objective of the New Economic Paradigm?

    <p>To smooth out the volatility in business cycles and achieve stable growth</p> Signup and view all the answers

    Which of the following is a characteristic of supply-side policies?

    <p>Increase productivity and efficiency through technological advancements</p> Signup and view all the answers

    What is the primary function of the public sector in South Africa?

    <p>To provide essential services that are not profit-driven</p> Signup and view all the answers

    Which of the following is a challenge faced by State-Owned Enterprises (SOEs)?

    <p>Inefficient use of resources due to lack of competition</p> Signup and view all the answers

    What is the primary objective of forecasting business cycles?

    <p>To predict future economic activity and prepare for economic fluctuations</p> Signup and view all the answers

    Which of the following is a type of economic indicator that predicts future economic activity?

    <p>Leading indicators</p> Signup and view all the answers

    What is the primary focus of demand-side policies?

    <p>Regulating aggregate demand through fiscal stimuli or monetary adjustments</p> Signup and view all the answers

    What is the primary objective of public sector budgets?

    <p>To allocate resources strategically and achieve sectoral supports</p> Signup and view all the answers

    Which of the following is a challenge faced by the public sector in South Africa?

    <p>Assessing the needs of the population accurately</p> Signup and view all the answers

    What is the primary function of Provincial Governments?

    <p>To manage regional issues, funded by both national budget and their own tax revenues</p> Signup and view all the answers

    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?

    <p>Foreign Sector</p> Signup and view all the answers

    What is the primary function of the financial market in the circular flow model?

    <p>To manage the flow of money and facilitate savings and investments</p> Signup and view all the answers

    What is measured by the Gross Domestic Product (GDP)?

    <p>The total economic output at market prices</p> Signup and view all the answers

    What is the term for the movement of goods and services in the circular flow model?

    <p>Real Flow</p> Signup and view all the answers

    Which market facilitates the trade of consumer goods and services?

    <p>Goods Market</p> Signup and view all the answers

    What is the primary function of households in the circular flow model?

    <p>To provide labor and resources to firms</p> Signup and view all the answers

    What is the term for the financial transactions that accompany the real flow of goods and services?

    <p>Money Flow</p> Signup and view all the answers

    What is the primary function of the government in the circular flow model?

    <p>To collect taxes and inject spending into the economy</p> Signup and view all the answers

    Which of the following statements is true about the Marginal Propensities to Consume (MPC) and Save (MPS)?

    <p>MPC + MPS = 1, where MPC is the proportion of income spent and MPS is the proportion saved</p> Signup and view all the answers

    What is the primary objective of fiscal policy during economic downturns?

    <p>To stimulate economic activity by increasing government spending and reducing taxes</p> Signup and view all the answers

    Which theory explains business cycles due to external shocks and normal market processes?

    <p>Classical and Neoclassical Theories</p> Signup and view all the answers

    What is the primary function of prices in national income accounting?

    <p>To categorize into Basic Prices, Factor Cost, and Market Prices</p> Signup and view all the answers

    Which sector of the economy provides labor and resources, and receives income?

    <p>Household Sector</p> Signup and view all the answers

    What is the primary focus of supply-side policies?

    <p>To reduce taxation and promote economic growth</p> Signup and view all the answers

    What is the primary objective of the New Economic Paradigm?

    <p>To smooth out the volatility in business cycles and achieve stable growth</p> Signup and view all the answers

    Which phase of the business cycle is marked by a decrease in economic activity?

    <p>Contraction</p> Signup and view all the answers

    What is the primary objective of the multiplier effect?

    <p>To illustrate the impact of initial increases in spending on economic output</p> Signup and view all the answers

    Which type of economic indicators predict future economic activity?

    <p>Leading Indicators</p> Signup and view all the answers

    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)?

    <p>Two-Sector Model</p> Signup and view all the answers

    What is the primary focus of supply-side policies?

    <p>Increasing productivity and efficiency through technological advancements</p> Signup and view all the answers

    What is the primary function of monetary policy?

    <p>To control inflation and stabilize economic activity through interest rates and money supply</p> Signup and view all the answers

    What is the primary objective of public sector budgets?

    <p>To allocate resources strategically over a three-year period</p> Signup and view all the answers

    What is the primary function of Provincial Governments?

    <p>Managing regional issues, funded by both national budget and their own tax revenues</p> Signup and view all the answers

    What is a challenge faced by the public sector?

    <p>Inefficiency due to lack of clear performance metrics and accountability</p> Signup and view all the answers

    What is a fiscal policy instrument used to manage economic activity?

    <p>Taxation</p> Signup and view all the answers

    Why is the public sector essential?

    <p>To provide structure and essential services that are not profit-driven</p> Signup and view all the answers

    What is a challenge faced by State-Owned Enterprises (SOEs)?

    <p>Inefficiency due to lack of competition and accountability</p> Signup and view all the answers

    What is the primary focus of forecasting business cycles?

    <p>Mitigating the adverse effects of downturns and capitalizing on periods of growth</p> Signup and view all the answers

    What is the primary objective of directing government spending towards public goods and services?

    <p>To encourage economic growth and stability</p> Signup and view all the answers

    What is the primary challenge faced by the public sector in South Africa?

    <p>Inefficiency and accountability</p> Signup and view all the answers

    What is the potential consequence of price controls in the economy?

    <p>Shortages or surpluses</p> Signup and view all the answers

    What is the primary function of the Laffer Curve?

    <p>To show the optimal tax rate that maximizes revenue</p> Signup and view all the answers

    What is the primary consequence of information failure in the public sector?

    <p>Inefficient outcomes</p> Signup and view all the answers

    What is the primary role of the public sector in South Africa?

    <p>To provide goods and services that are not suitable for private sector delivery</p> Signup and view all the answers

    What is the primary function of households in the circular flow model?

    <p>To provide labor and resources</p> Signup and view all the answers

    What is the term for the flow of financial transactions in the circular flow model?

    <p>Money Flows</p> Signup and view all the answers

    Which market facilitates the trading of currencies necessary for international trade?

    <p>Foreign Exchange Market</p> Signup and view all the answers

    What is the primary function of the government in the circular flow model?

    <p>To inject spending into the economy</p> Signup and view all the answers

    What is the term for the total economic output at market prices?

    <p>Gross Domestic Product</p> Signup and view all the answers

    Which sector of the economy involves trade activities, where exports add to the economic flow and imports lead to outflows of currency?

    <p>Foreign Sector</p> Signup and view all the answers

    What is the term for the movement of goods and services in the circular flow model?

    <p>Real Flows</p> Signup and view all the answers

    Which market deals with consumer goods and services?

    <p>Goods Market</p> Signup and view all the answers

    What is a potential consequence of setting administered prices below market equilibrium?

    <p>Shortage of goods</p> Signup and view all the answers

    What is a challenge faced by the public sector in South Africa related to decision-making?

    <p>Information failure</p> Signup and view all the answers

    What is the primary objective of directing government spending towards public goods and services?

    <p>To provide essential services</p> Signup and view all the answers

    What is the Laffer Curve primarily used to illustrate?

    <p>The relationship between tax rates and tax revenue</p> Signup and view all the answers

    What is a consequence of excessive bureaucracy in the public sector?

    <p>Stifling of innovation</p> Signup and view all the answers

    What is the primary function of the public sector in South Africa?

    <p>To manage resources and provide essential services</p> Signup and view all the answers

    What is the primary objective of the New Economic Paradigm?

    <p>To smooth out the volatility in business cycles and achieve stable growth</p> Signup and view all the answers

    What is the primary focus of supply-side policies?

    <p>To increase productivity and efficiency through technological advancements, regulatory reforms, and incentives for industries</p> Signup and view all the answers

    What type of economic indicators confirm trends that are already in process?

    <p>Lagging Indicators</p> Signup and view all the answers

    What is the primary function of Provincial Governments?

    <p>To manage regional issues, funded by both national budget and their own tax revenues</p> Signup and view all the answers

    What is a challenge faced by the public sector?

    <p>Inefficiency due to a lack of clear performance metrics and accountability</p> Signup and view all the answers

    What is the primary objective of public sector budgets?

    <p>To plan and allocate resources strategically over a three-year period</p> Signup and view all the answers

    What is a fiscal policy instrument used to manage economic activity?

    <p>Taxation</p> Signup and view all the answers

    What type of economic indicators predict future economic activity?

    <p>Leading Indicators</p> Signup and view all the answers

    What is a challenge faced by State-Owned Enterprises (SOEs)?

    <p>Inefficiency due to a lack of competition and accountability</p> Signup and view all the answers

    Why is the public sector essential?

    <p>To provide structure and essential services that are not profit-driven</p> Signup and view all the answers

    What is the primary difference between the two-sector model and three/four-sector models?

    <p>Inclusion of government and foreign transactions</p> Signup and view all the answers

    Which theory suggests that business cycles are driven by external shocks and normal market processes?

    <p>Classical and Neoclassical Theories</p> Signup and view all the answers

    What is the result of initial increases in spending according to the multiplier effect?

    <p>A more significant overall increase in economic output</p> Signup and view all the answers

    What is the term for the phase of a business cycle marked by a decrease in economic activities?

    <p>Contraction</p> Signup and view all the answers

    What is the primary goal of monetary policy during booms?

    <p>To curb inflation</p> Signup and view all the answers

    What is the term for the highest point of a business cycle?

    <p>Peak</p> Signup and view all the answers

    What is the primary difference between endogenous and exogenous factors influencing business cycles?

    <p>Endogenous factors arise from within the economic system, while exogenous factors are external</p> Signup and view all the answers

    What is the primary goal of fiscal policy during economic downturns?

    <p>To stimulate economic activity through increased government spending and reduced taxes</p> Signup and view all the answers

    What is the name of the theory that proposes business cycles are due to changes in aggregate demand?

    <p>Keynesian Theory</p> Signup and view all the answers

    What is the term for the lowest point of a business cycle?

    <p>Trough</p> Signup and view all the answers

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