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ECS1500 Assignment 2 Semester 1 2019 FULL MARKS

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  • August 19, 2021
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Economics 1500
ECS1500
Department of Economics
Assignment 02 for Semester 01 (compulsory)
Unique Number: 768461
Due Date: 8 April 2019




Complete the assignment and provide your final answers on the prescribed answer sheet.
Feedback on these questions will be provided on myUnisa under Additional Resources after
the final closing date.

For questions 2.1 to 2.5 you need to indicate if the statement is true or false. As indicated, if
the statement is true, choose [1] and if the statement is false, choose [2].

2.1 Real GDP is calculated at market prices.

[1] True
[2] False

, Answer:

Real GDP is calculated at constant prices while nominal GDP is measured at current prices.
Therefore, this statement is incorrect.

2.2 Income that is earned by an Angolan teacher in South Africa is included in the GNI but
not in the GDP.

[1] True
[2] False

Answer:

GNI (Gross National Income) includes primary income from the rest of the world and
excludes the primary income to the rest of the world. Therefore, the income of the Angolan
teacher will not be included in the South African GNI, since the teacher is not South African.
It will, however, be included in the GDP as the GDP includes all goods and service produced
in a country during a particular period, regardless of the nationality of the person
responsible for the work. Therefore, this statement is incorrect.

2.3 Conference fees are included in the producer price index.

[1] True
[2] False

Answer:

The producer price index is a series of numbers (an index) showing the average change over
time in the selling price received by producers for their output, which thereby measures the
cost of production. The PPI excludes the cost of services (such as conference fees).
Therefore, this statement is false.

(Producer Price Index = PPI) Study guide Page 115:
The second important price index that we have to know about is the producer price index
(PPI). Before 1980 this was known as the wholesale price index. From this we can deduce
that the prices of this index are measured at the level of the first significant commercial
transaction. Prices of imported goods are measured at the point when they enter the
country, and locally manufactured goods are priced when they leave the factory. In contrast
to the CPI, the PPI also includes capital and intermediate goods, but excludes services.
Food products, beverages and tobacco
Textiles, clothing and footwear
Wood and paper products
Coke, petroleum, chemical, rubber and plastic products
Metals, machinery, equipment and computing equipment
Electrical machinery and apparatus and subcomponents
Transport equipment

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