5A Ch.1
M.C. Questions
1.
B
2.
D
3.
C
4.
C
7.
C
8.
A
9.
C
10.
C
5.
B
6.
d
Short Questions
1. It should not be counted as it does not involve production directly. (2)
2.
(a)
410 + 125 – 3 + 82 + 30 + 14 – 50 = $608 billion (steps (2), answer (1))
(b)
GDPMP = GDPFC + Indirect taxes less subsidies (1) Since ‘indirect taxes less subsidies’ is greater
than zero, GDPMP is higher. (1)
(c)
(i)
Population. (1)
(ii)
Per capita GDP has eliminated the factor of population difference, so it can reflect the figure
every person can get on average. (2)
(iii)
Per capita real GDP has eliminated the factor of price differences, so it can reflect the output every
person can get on average. (2)
3.
(a)
The price level and the population have increased, (2) but the per capita real consumption may
not have increased. (2)
(b)
National income statistics do not reflect changes in the following areas: environment, e.g.,
pollution / leisure time or working hours / goods not traded in the market / income distribution.
(Any two, 2 + 2)
4.
The salary is an export of the services of the law firm, so it is included in local GDP. (1) It is the income
of a Hong Kong resident, so it is included in local GNP. (1)
5.
(a)
The wages should be included in the GDP of Hong Kong because foreign domestic helpers are
resident producing units. (2)
(b)
The wages should be included in the GNP of Hong Kong because foreign domestic helpers are
domestic residents. (2)
6.
7.
8.
(a)
Yes, because his income is part of the output value of a resident producing unit (the school). (2)
(b)
Yes, because he is a Hong Kong resident. (2)
(a)
No. The furniture and equipment are second-hand goods. (2)
(b)
Yes. It is the income for the services provided by the accountancy firm in Hong Kong. (2)
Production approach:
Contribution to GDP = (1,300 + 800 – 1,800) + (1,800 + 200 – 500 – 800) +(800 – 300 – 150) + (500 +
300) = $2,150 (steps (2), answer (1))
Expenditure approach:
Contribution to GDP = 1,300 + 800 + 200 – 150 = $2,150(Change in inventories is added, and the
import content is subtracted) (steps (2), answer (1))
News Commentary Questions
9 (a) The price level has fallen. (1)
(b)
$8.1 billion (1)
(c)
The amount of factor income from and paid abroad were still huge. (1) Both amounts exceeded
two-fifths of Hong Kong’s GDP. (1)
(d)
Hong Kong residents can get higher returns from investments abroad. Factor income from abroad
will rise. (2) The economy of Hong Kong will improve with the external economic environment.
Foreign investments will have higher return. Factor income paid abroad will rise. (2)