June P1 Easy

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

To utilize labor and resources to produce goods and services
To facilitate trade activities, including exports and imports (correct)
To collect taxes and inject spending into the economy
To provide labor and resources, receiving income used for consumption

What is measured by GDP?

The total economic output at wholesale prices
The total economic output at production cost
The total economic output at market prices (correct)
The total economic output at retail prices

Which market deals in resources like labor and capital?

Factor Market (correct)
Financial Market
Foreign Exchange Market
Goods Market

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

To provide labor and resources, receiving income used for consumption, savings, and taxes (A) Signup and view all the answers

What is the name of the economic model that illustrates the economic activities among various sectors and their interactions through markets?

Circular Flow Model (A) Signup and view all the answers

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

Real Flows (A) Signup and view all the answers

Which sector of the economy utilizes labor and resources to produce goods and services?

Firms (C) Signup and view all the answers

What is the name of the market that manages the flow of money?

Financial Market (D) Signup and view all the answers

What is Gross National Income (GNI)?

The total income earned by a country's residents, including income received from abroad. (B) Signup and view all the answers

What is the focus of the Two-Sector Model in the Multiplier Effect?

Household and firm interactions. (C) Signup and view all the answers

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

k = 1 / (1 - MPC) (D) Signup and view all the answers

What characterizes the expansion phase of a business cycle?

Increase in economic activities. (D) Signup and view all the answers

What is the highest point of economic activity in a business cycle?

Peak (D) Signup and view all the answers

What is an example of an exogenous factor influencing business cycles?

Natural disasters. (C) Signup and view all the answers

Which theory suggests that business cycles are driven by changes in aggregate demand?

Keynesian Theory (B) Signup and view all the answers

What is the primary tool used in Monetary Policy?

Interest rates (B) Signup and view all the answers

What is the purpose of Fiscal Policy?

To stabilize economic activity. (B) Signup and view all the answers

What is the function of the Multiplier Effect?

To measure the impact of initial spending on economic output. (C) Signup and view all the answers

What is the main objective of the New Economic Paradigm?

To smooth out the volatility in business cycles and achieve stable growth (C) Signup and view all the answers

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

Lagging indicators (C) Signup and view all the answers

What is the main purpose of the public sector?

To provide structure and essential services that are not profit-driven (D) Signup and view all the answers

What is a challenge faced by the public sector in terms of efficiency?

Lack of clear performance metrics and accountability (B) Signup and view all the answers

What is the objective of pricing policy in the public sector?

To fulfill social responsibilities (A) Signup and view all the answers

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

To plan over a three-year period (A) Signup and view all the answers

What is the main objective of fiscal policy?

To manage economic activity (B) Signup and view all the answers

What is the Laffer Curve related to?

Fiscal policy (D) Signup and view all the answers

What is the main purpose of forecasting business cycles?

To prepare for economic fluctuations and mitigate adverse effects (A) Signup and view all the answers

What is the role of state-owned enterprises (SOEs) in the public sector?

To operate in the public interest (B) Signup and view all the answers

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

To encourage economic growth and stability (C) Signup and view all the answers

What does the Laffer Curve illustrate?

The relationship between tax rates and tax revenue (A) Signup and view all the answers

What is a potential consequence of price controls being set below market equilibrium?

Shortages (A) Signup and view all the answers

What is a result of decisions based on incomplete or inaccurate information?

Inefficient outcomes (C) Signup and view all the answers

What is a potential consequence of excessive bureaucracy?

Stifled innovation (B) Signup and view all the answers

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

Managing resources and providing essential services (A) Signup and view all the answers

What is the primary purpose of the circular flow model?

To describe the movement of money and goods across different sectors of the economy (C) Signup and view all the answers

Which market facilitates international trade?

Foreign Exchange Market (C) Signup and view all the answers

What is the name of the economic model that measures the total economic output at market prices?

Gross Domestic Product (GDP) (D) Signup and view all the answers

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

To collect taxes and inject spending into the economy (D) Signup and view all the answers

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

Real Flows (B) Signup and view all the answers

Which sector of the economy receives income used for consumption, savings, and taxes?

Households (B) Signup and view all the answers

What is the term for the financial transactions for goods and services in the circular flow model?

Money Flows (D) Signup and view all the answers

What is the result of additional spending in the economy?

An amplification of economic activity (A) Signup and view all the answers

What is the main difference between GNI and GDP?

GNI accounts for foreign income, while GDP does not (D) Signup and view all the answers

What is the Two-Sector Model focused on?

Household and firm interactions (A) Signup and view all the answers

What is the purpose of the Multiplier Effect?

To measure the impact of initial spending on economic output (D) Signup and view all the answers

What characterizes the contraction phase of a business cycle?

Decreased economic activity and decline in economic indicators (B) Signup and view all the answers

What is the purpose of Fiscal Policy?

To stabilize economic activity through government spending and taxation (A) Signup and view all the answers

What is the Schumpeterian Theory focused on?

The role of technological innovation (D) Signup and view all the answers

What is the peak of a business cycle?

The highest point of economic activity (D) Signup and view all the answers

What is an example of an endogenous factor influencing business cycles?

Changes in consumer confidence (C) Signup and view all the answers

What is the purpose of Monetary Policy?

To stabilize economic activity through interest rates and money supply (A) Signup and view all the answers

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

k = 1 / (1 - MPC) (B) Signup and view all the answers

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

To encourage economic growth and stability (A) Signup and view all the answers

What is a potential consequence of price controls being set below market equilibrium?

Shortage (B) Signup and view all the answers

What is a result of decisions based on incomplete or inaccurate information?

Inefficient outcomes (C) Signup and view all the answers

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

Stifling innovation and responsiveness (C) Signup and view all the answers

What does the Laffer Curve illustrate?

The relationship between tax rates and tax revenue (D) Signup and view all the answers

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

To manage resources and provide public goods and services (C) Signup and view all the answers

What is the main objective of the New Economic Paradigm?

To smooth out the volatility in business cycles (A) Signup and view all the answers

What is the focus of supply-side policies?

Increasing productivity and efficiency (B) Signup and view all the answers

What type of economic indicator confirms trends that are already in process?

Lagging Indicators (A) Signup and view all the answers

What is the main objective of forecasting business cycles?

To mitigate the adverse effects of downturns (D) Signup and view all the answers

What is the primary role of the public sector?

To provide structure and essential services (D) Signup and view all the answers

What is a challenge faced by the public sector in terms of efficiency?

Lack of clear performance metrics (C) Signup and view all the answers

What is the objective of pricing policy in the public sector?

To fulfill social responsibilities (A) Signup and view all the answers

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

To plan over a three-year period (D) Signup and view all the answers

What is the main objective of fiscal policy?

To manage aggregate demand (A) Signup and view all the answers

What is the Laffer Curve related to?

Fiscal policy and taxation (D) Signup and view all the answers

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

To trade consumer goods and services (B) Signup and view all the answers

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

Money Flows (A) Signup and view all the answers

What is the role of firms in the circular flow model?

To utilize labor and resources to produce goods and services (A) Signup and view all the answers

What is measured by the GDP?

The total economic output at market prices (C) Signup and view all the answers

What is the function of the foreign exchange market?

To facilitate international trade (A) Signup and view all the answers

What is the result of additional spending in the economy?

An amplification of economic activity (D) Signup and view all the answers

What is the role of the government sector in the circular flow model?

To collect taxes and inject spending into the economy (C) Signup and view all the answers

What is the name of the economic model that illustrates the economic activities among various sectors and their interactions?

Circular Flow Model (D) Signup and view all the answers

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

To encourage economic growth and stability (D) Signup and view all the answers

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

Distortion of market operations leading to inefficiencies (C) Signup and view all the answers

What is a result of decisions based on incomplete or inaccurate information?

Inefficient outcomes (B) Signup and view all the answers

What is the Laffer Curve related to?

The relationship between tax rates and tax revenue (A) Signup and view all the answers

What is a potential consequence of price controls being set below market equilibrium?

Shortage of goods and services (C) Signup and view all the answers

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

To manage resources and provide services not suitable for private sector delivery (A) Signup and view all the answers

What is the primary objective of the New Economic Paradigm?

To smooth out the volatility in business cycles (C) Signup and view all the answers

What type of economic indicators predict future economic activity?

Leading indicators (B) Signup and view all the answers

What is the primary goal of the public sector?

To provide essential services (C) Signup and view all the answers

What is the main challenge faced by the public sector in terms of efficiency?

Inefficient use of resources (D) Signup and view all the answers

What is the primary objective of fiscal policy?

To promote sustainable economic growth (A) Signup and view all the answers

What is the Laffer Curve related to?

The relationship between taxation and economic growth (D) Signup and view all the answers

What is the primary purpose of forecasting business cycles?

To mitigate the adverse effects of downturns (D) Signup and view all the answers

What is the role of state-owned enterprises (SOEs) in the public sector?

To operate in the public interest (D) Signup and view all the answers

What is the main objective of the public sector in terms of pricing policy?

To fulfill social responsibilities (C) Signup and view all the answers

What is the primary purpose of the Medium-Term Expenditure Framework (MTEF) in the public sector?

To plan over a three-year period (A) Signup and view all the answers

What is the main difference between calculating GNI and GDP?

GNI accounts for income earned by residents, while GDP accounts for income earned by foreigners (A) Signup and view all the answers

What is the primary focus of the Three-Sector Model in the Multiplier Effect?

Government and foreign transactions (D) Signup and view all the answers

What is the name of the economic model that measures the total economic output at different price levels?

National Income Model (A) Signup and view all the answers

What is the primary cause of business cycles according to the Keynesian Theory?

Changes in aggregate demand influenced by collective behavior of consumers and businesses (B) Signup and view all the answers

What is the primary tool used to stabilize economic activity during booms and downturns?

Monetary Policy (C) Signup and view all the answers

What is the name of the phase of the business cycle characterized by a decline in economic activity?

Contraction (C) Signup and view all the answers

What is the main objective of Fiscal Policy?

To stabilize economic activity during booms and downturns (B) Signup and view all the answers

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

k = 1 / (1 - MPC) (C) Signup and view all the answers

What is the primary role of government in the Schumpeterian Theory?

To promote technological innovation (B) Signup and view all the answers

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

Peak (A) Signup and view all the answers

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

To facilitate economic activities among various sectors (B) Signup and view all the answers

Which sector of the economy is responsible for generating revenue and expenditures within the economy?

Firms (B) Signup and view all the answers

What is the term for the financial transactions for goods and services in the circular flow model?

Money Flows (B) Signup and view all the answers

What is the result of additional spending in the economy, according to the multiplier effect?

An increase in economic activity (A) Signup and view all the answers

What is the focus of the circular flow model?

Illustrating the economic activities among various sectors and their interactions through markets (B) Signup and view all the answers

Which market facilitates international trade?

Foreign Exchange Market (D) Signup and view all the answers

What is the name of the economic model that measures the total economic output at market prices?

Gross Domestic Product (GDP) (C) Signup and view all the answers

Which sector of the economy receives income used for consumption, savings, and taxes?

Households (D) Signup and view all the answers

What is the primary objective of the New Economic Paradigm?

To smooth out the volatility in business cycles (A) Signup and view all the answers

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

Lagging Indicators (C) Signup and view all the answers

What is the primary purpose of the public sector?

To provide essential services (B) Signup and view all the answers

What is a challenge faced by the public sector in terms of efficiency?

Inefficiency due to lack of clear performance metrics (D) Signup and view all the answers

What is the main objective of pricing policy in the public sector?

To fulfill social responsibilities (B) Signup and view all the answers

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

To plan over a three-year period (D) Signup and view all the answers

What is the primary tool used in Fiscal Policy?

Government Spending (D) Signup and view all the answers

What is the Laffer Curve related to?

Taxation and economic growth (B) Signup and view all the answers

What is the main objective of forecasting business cycles?

To mitigate the adverse effects of downturns (A) Signup and view all the answers

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

To encourage economic growth and stability (D) Signup and view all the answers

What is the role of state-owned enterprises (SOEs) in the public sector?

To manage resources and services (D) Signup and view all the answers

What is the Laffer Curve used to illustrate?

The relationship between tax rates and tax revenue (C) Signup and view all the answers

What is a potential consequence of subsidies and taxes?

They can distort market operations and lead to inefficiencies (B) Signup and view all the answers

What is a result of decisions based on incomplete or inaccurate information?

Inefficient outcomes (C) Signup and view all the answers

What is a potential consequence of excessive bureaucracy?

It can stifle innovation and responsiveness (C) Signup and view all the answers

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

To manage resources and provide services that are not suitable for private sector delivery (B) Signup and view all the answers

What is Gross National Income (GNI) primarily concerned with?

All income earned by a country's residents, adjusting for income received from abroad (D) Signup and view all the answers

What is the primary focus of the Three and Four-Sector Models?

Government and foreign transactions, including taxes and imports (B) Signup and view all the answers

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

k = 1 / (1 - MPC) (D) Signup and view all the answers

What is the name of the phase in a business cycle where economic activity is at its highest point?

Peak (B) Signup and view all the answers

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

Classical and Neoclassical Theories (D) Signup and view all the answers

What is the primary tool used in Monetary Policy?

Interest rates and control of money supply (A) Signup and view all the answers

What is the main objective of Fiscal Policy?

To stabilize economic activity through government spending and taxation (B) Signup and view all the answers

What is an example of an exogenous factor influencing business cycles?

Natural disasters (C) Signup and view all the answers

What is the primary purpose of the Multiplier Effect?

To explain how initial increases in spending lead to a larger overall increase in economic output (A) Signup and view all the answers

What characterizes the contraction phase of a business cycle?

Economic indicators decline, and businesses start to slow down production (A) Signup and view all the answers

What is the main function of the firms sector in the circular flow model?

Utilize labor and resources to produce goods and services (A) Signup and view all the answers

What is the main function of the households sector in the circular flow model?

Provide labor and resources, receiving income used for consumption, savings, and taxes (A) Signup and view all the answers

What is the term for the financial transactions for goods and services in the circular flow model?

Money Flows (A) Signup and view all the answers

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

Real Flows (A) Signup and view all the answers

What market facilitates international trade?

Foreign Exchange Market (C) Signup and view all the answers

What is the term for the amount of additional spending that amplifies economic activity?

The Multiplier Effect (A) Signup and view all the answers

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

GDP (B) Signup and view all the answers

What is the primary purpose of the circular flow model?

To illustrate the economic activities among various sectors and their interactions through markets (A) Signup and view all the answers

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

To encourage economic growth and stability (C) Signup and view all the answers

What does the Laffer Curve illustrate?

The relationship between tax rates and tax revenue (B) Signup and view all the answers

What is a potential consequence of price controls being set below market equilibrium?

Shortages (A) Signup and view all the answers

What is a result of decisions based on incomplete or inaccurate information?

Inefficient outcomes (C) Signup and view all the answers

What is a potential consequence of excessive bureaucracy?

Stifling innovation and responsiveness (B) Signup and view all the answers

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

To manage resources and provide essential public goods and services (B) Signup and view all the answers

What is the main purpose of Gross National Income (GNI)?

To account for all income earned by a country's residents and adjust for income received from abroad (B) Signup and view all the answers

What is the focus of the Three-Sector Model in the Multiplier Effect?

Government and foreign transactions (B) Signup and view all the answers

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

k = 1 / (1 - MPC) (B) Signup and view all the answers

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

Peak (D) Signup and view all the answers

Which theory suggests that business cycles are driven by changes in aggregate demand?

Keynesian Theory (B) Signup and view all the answers

What is the primary tool used in Monetary Policy?

Interest rates and control of money supply (A) Signup and view all the answers

What is the main objective of Fiscal Policy?

To stabilize economic activity through government spending and taxation (C) Signup and view all the answers

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

Contraction (C) Signup and view all the answers

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

Schumpeterian Theory (C) Signup and view all the answers

What is an example of an exogenous factor influencing business cycles?

Natural disasters (B) Signup and view all the answers

What is the primary objective of the New Economic Paradigm?

To smooth out the volatility in business cycles and achieve stable growth (C) Signup and view all the answers

What type of economic indicators predict future economic activity by moving ahead of the business cycle?

Leading indicators (C) Signup and view all the answers

What is the primary function of the public sector?

To provide essential services that are not profit-driven (A) Signup and view all the answers

What is the main objective of the Medium-Term Expenditure Framework (MTEF) in the public sector?

To plan over a three-year period (A) Signup and view all the answers

What is the primary tool used in fiscal policy?

Taxation (C) Signup and view all the answers

What is the main challenge faced by the public sector in terms of efficiency?

Lack of competition and accountability (D) Signup and view all the answers

What is the primary objective of forecasting business cycles?

To predict future economic activity (C) Signup and view all the answers

What is the role of state-owned enterprises (SOEs) in the public sector?

To operate in the public interest (D) Signup and view all the answers

What is the primary purpose of the Laffer Curve?

To illustrate the relationship between tax rates and government revenue (B) Signup and view all the answers

What is the main objective of pricing policy in the public sector?

To fulfill social responsibilities (A) Signup and view all the answers

June P1 Easy

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Questions and Answers

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

What is measured by GDP?

Which market deals in resources like labor and capital?

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

What is the name of the economic model that illustrates the economic activities among various sectors and their interactions through markets?

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

Which sector of the economy utilizes labor and resources to produce goods and services?

What is the name of the market that manages the flow of money?

What is Gross National Income (GNI)?

What is the focus of the Two-Sector Model in the Multiplier Effect?

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

What characterizes the expansion phase of a business cycle?

What is the highest point of economic activity in a business cycle?

What is an example of an exogenous factor influencing business cycles?

Which theory suggests that business cycles are driven by changes in aggregate demand?

What is the primary tool used in Monetary Policy?

What is the purpose of Fiscal Policy?

What is the function of the Multiplier Effect?

What is the main objective of the New Economic Paradigm?

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

What is the main purpose of the public sector?

What is a challenge faced by the public sector in terms of efficiency?

What is the objective of pricing policy in the public sector?

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

What is the main objective of fiscal policy?

What is the Laffer Curve related to?

What is the main purpose of forecasting business cycles?

What is the role of state-owned enterprises (SOEs) in the public sector?

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

What does the Laffer Curve illustrate?

What is a potential consequence of price controls being set below market equilibrium?

What is a result of decisions based on incomplete or inaccurate information?

What is a potential consequence of excessive bureaucracy?

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

What is the primary purpose of the circular flow model?

Which market facilitates international trade?

What is the name of the economic model that measures the total economic output at market prices?

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

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

Which sector of the economy receives income used for consumption, savings, and taxes?

What is the term for the financial transactions for goods and services in the circular flow model?

What is the result of additional spending in the economy?

What is the main difference between GNI and GDP?

What is the Two-Sector Model focused on?

What is the purpose of the Multiplier Effect?

What characterizes the contraction phase of a business cycle?

What is the purpose of Fiscal Policy?

What is the Schumpeterian Theory focused on?

What is the peak of a business cycle?

What is an example of an endogenous factor influencing business cycles?

What is the purpose of Monetary Policy?

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

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

What is a potential consequence of price controls being set below market equilibrium?

What is a result of decisions based on incomplete or inaccurate information?

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

What does the Laffer Curve illustrate?

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

What is the main objective of the New Economic Paradigm?

What is the focus of supply-side policies?

What type of economic indicator confirms trends that are already in process?

What is the main objective of forecasting business cycles?

What is the primary role of the public sector?

What is a challenge faced by the public sector in terms of efficiency?

What is the objective of pricing policy in the public sector?

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

What is the main objective of fiscal policy?

What is the Laffer Curve related to?

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

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

What is the role of firms in the circular flow model?

What is measured by the GDP?

What is the function of the foreign exchange market?

What is the result of additional spending in the economy?

What is the role of the government sector in the circular flow model?

What is the name of the economic model that illustrates the economic activities among various sectors and their interactions?