tic understanding of patterns of production, consumption and distribution of goo

Question

tic understanding of patterns of production, consumption and distribution of goods and i. A study of money, banking, capital formation and wealth ili. A study of how limited r iv. The study of the application of scarce means to a multitude of are used to satisfy unlimited humarn Which of the above statements can be associated with the broad subject a) None of them. b) All of them. c) Only statements i, ii and ili. d) Only statements I, ili and iv. 1.2 The basic economic problems faced by a socialist economy a) b) c) d) Different from those faced by a mixed economy Different from those faced by a market economy, but the same as those Similar to those faced by both a market and a mixed economy Different from those faced by a market economy. 1.3 GDP at A prices will usually be greater than GDP atpr CP prices because of a) constant; current; inflation b) current; constant; inflation c) constant; current; depreciation d) current; constant; depreciation Which one of the following is the essential function of money? a) 1.4 Medium of exchange (or means of payment). b) Store of value. c) Factor of production. When the inflation rate is expected to exceed the target rate by a significant margin, the South African Reserve Bank (SARB) will tend to: a) Reduce the cost of credit to the banks. b) Increase the repurchase rate (repo rate). c) Purch d) Decrease the repurchase rate (repo rate). d) Source of income. 1.5 ase government bonds on the open market. 80

Explanation / Answer

Question 1.1

Answer: B - All of the Above.

Note: Brief explaination:

Question 1.2

Answer: B- Different from those faced by a market economy, but same as those faced by a mixed economy.

Note: Breif explaination

Socialist Economy is a type of economic system where the factors of production that is the land and capital is owned and controlled by the government. Private properties can be held by individuals only till a certain limit.

Market economy is different from socialist economy because in market economy there is little control held by the Government as the major economic decision on pricing and other factors are carried out by the individual businesses.

A mixed economy has the same characterics as the socialist economy. The mixed economy allows the use of capital by individual business freely but there is government interference in the economic activities.

Question 1.4

Answer: A- Medium of excahnge and B - Store of Value

Medium of Excahnge: Money is used for the purpose of buying and selling goods and serives. In the olden days, when there was no money, goods were excahnged using the barter systems (Exchange of goods for other goods)

Store of value: Store of value refers to an asset that does not depreciate. Money acts as a store of value as it does not depreciate.

Question 1.5

Answer: B - Increase the repurchase rate (repo rate)

Incresing the Repo Rate: When the Repo rate is increased, the banks raise the interest on the loans offered to the customers as the banks have to pay a higher interest to the central bank. The customers thus do not take loans from the bank, which leads to a shortage of money in the economy. Since there is less money to spend the Inflation rate is controlled.

Question 1.6

Answer: D- Public Corporations form part of general government.

Public Corporations are not a part of the General Government. The General Government consists of the Central, State and the Local Government.

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