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Questions 9 to 15 are based on the following approximate figures for Island Mathos’s economy in...

Questions 9 to 15 are based on the following approximate figures for Island Mathos’s economy in 2019: Investment spending = R360 million Government spending = R420 million Real GDP = R2 100 million Estimated population = 20 million Labour force = 7 million Unemployment rate = 20% Budget deficit = R140 million Government debt = R500 million Multiplier = 2.5

9. Island Mathos experiences structural constraints. The central bank of the country and the World Bank estimated that the potential growth rate for Mathos is 3.5%. Given a real GDP of R2 100 million in 2019 by how much should real GDP have to increase to achieve an economic growth rate of 3.5%? 1. R7 350 million. 2. R73.5 million. 3. R60 000 million. 4. R735 million. 10. Which one of the following statements is INCORRECT? It is clear from the data for Island Mathos … 1. the budget deficit as a percentage of real GDP is more than 6%. 2. government debt as a percentage of real GDP is less than 25%. 3. that investment spending as a percentage of real GDP is greater than government spending as a percentage of real GDP. 4. that 1.4 million people were unemployed on the Island.

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Answer #1

Q-1 ANSWER :: (2)R73.5 MILLION

=> Explanation ::

Real GDP = 2100 MILLION And 3.5 % Is Growth Rate So Increased GDP

= 2100*3.5/100 = R73.5 MILLION

New GDP = 2100 + 73.5 = 2173.5 MILLION

Q-2 ANSWER :: (3) Investment Sending As a Percentage Of Real GDP is Greater Than Government Spending As A Percentage Of Real GDP

=> Investment Spending Percentage = 360 * 100/2100

= 17.14 %

=> Government Spending Percentage = 420*100/2100

= 20 %

=> So, It Is Clear that Government Spending As A Percentage Of Real GDP Is Greater than Investment Spending As A Percentage Of Real GDP

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