Answer to Question #146660 in Macroeconomics for Prince Chauke

Question

Q.1.3 In the base year, a country produced 50 units of output at a price of R6,00 each
for a nominal GDP of R300. This year it produces 60 units of output at a price of
R8,00 each. What is the percentage change in real GDP since the base year?

(a) 5%;
(b) 10%;
(c) 20%;
(d) 15%.

Q.1.4 Which of the following statements about Fiscal Policy is INCORRECT?

(a) In order to combat inflation, the South African Reserve Bank must apply a
contractionary fiscal policy;
(b) A contractionary fiscal policy can result in higher levels of unemployment;
(c) Expansionary fiscal policy will increase the budget deficit;
(d) The application of fiscal policy will have no effect on aggregate supply in the
AD‐AS model.

Answer 1

Q.1.3.the percentage change in real GDP since the base year

$\%change=\; (10/50)\times \; 100\%$ $\%change=\; (10/50)\times \; 100\%$ %change= (10/50)× 100%

=(c) 20%

Q.1.4.(d) The application of fiscal policy will have no effect on aggregate supply in the

AD‐AS model.