REVISION WORKSHEET 1
QUESTION1 [10 marks]
Use the statistics in Table 2 to calculate the GDP at factor cost and the GDP at market
prices using the income method. Clearly show your work.
Table 2
Taxes on products
Other taxes on production
Gross capital formation
Consumption of fixed capital
Final consumption expenditure by households
Exports
Net operating surplus
Other subsidies on production
Subsidies on products
Compensation of employees
N$ millions
58 185
11 644
105 858
78 923
343 037
109 117
169 191
2 846
5 746
309 064
QUESTION 2 [10 marks]
The following is a simplified hypothetical example of the value added method of
calculating GDP. Use the information given and show how the value added method is
used to calculate GDP. According to this example, how much value added do the
tables contribute to the GDP?
(a)
(b)
(c)
(d)
A forester chops down 100 trees and sells them @ N$30 each to a sawmill.
The sawmill processes the trees into timber and sells the timber @ N$7 500 to a
factory.
The factory produces 40 tables and sells them @ N$350 each to a retailer.
The retailer sells the 40 tables @ N$550 each to consumers.
QUESTION 3 [4 marks]
Ceteris paribus, what will happen to the money supply in each of the following cases?
Explain each of your answers.
4.1
4.2
The Monetary Policy Committee of the Bank of Namibia lowers the bank rate.
(2)
The Monetary Policy Committee of the Bank of Namibia raises the required cash
reserve ratio.
(2)
QUESTION 4 [6 marks]
Table 1 shows the amount of tax paid by individuals in three different income
categories. Calculate the percentage of income tax paid and for each of the three taxes
A, B and C indicate whether the tax is progressive, proportional or regressive.
Table 1 Amount of Tax Paid by Income Level
Income Percentage
Income
Percentage
N$1 000
of income
N$10 000
of income
Income
N$100 000
Tax A
N$200
N$3 000
N$40 000
Tax B
N$80
N$600
N$4 000
Tax C
N$100
N$1 000
N$10 000
Percentage
of income
Tax A is _____________
Tax B is _____________
Tax C is _____________
(12 x 0.5 = 6)