Review of SOL - H2 EC 2024

Which statement best describes Standard of Living?

• Measure of well-being residents in a country

• Measure of total health of a country

• Measure of total wealth of a country

• Measure of total net worth of a country

Answer explanation

Which of the following is most useful to measure the size of an economy?

• Real GDP

• Real GNI per capita

• Real GDP per capita

• Nominal GNI

Answer explanation

Refer to page 7 of your notes:

A country producing a larger value of output can be seen as having a bigger economy. Hence, the larger the GDP, the larger the size of the economy. GDP is a more suitable indicator of the size of a country’s economy than GNI because the output level of an economy directly depends on the resources located within the country.

An increase in an economy's material SOL can impact its non-material SOL both positively & negatively.

• True.

• False.

Answer explanation

If a Japanese Toyota is made in India, it will be counted in

• India's GNI and Japan's GDP

• India's GDP and Japan's GNI

• The GDP of both India and Japan

• The GNI of both India and Japan

Answer explanation

Which of the following is counted in SG's GNI but NOT its GDP? Select all correct option(s).

• A notty Singaporean student selling old TJ notes to a student in India

• Wages paid to your awesome TJ Singaporean econs tutors

• Earnings from a cafe operated by Singaporeans in Vietnam

• Profits repatriated to Germany by Mercedes-Benz

Answer explanation

For developing countries that are highly dependent on foreign investments, GDP will be significantly ______ than GNI.

• lower

• higher

Answer explanation

Which of the following statement(s) is true for the concept of 'real output'?

• it measures the physical output produced

• it accounts for inflation by removing the changes in general price levels

• it is measured using constant or base year prices

• any change in real output is not due to changes in prices

Answer explanation

What does GDP at 'current market prices' refer to?

• Real GDP

• Nominal GDP

• PPP-adjusted GDP

• GNI

Answer explanation

Refer to page 8 of your notes:

nominal output refers to the monetary value of the goods and services produced, measured at current or prevailing market prices.

We can conclude that India has a higher material SOL than Singapore in the same year.

• True.

• False.

Answer explanation

Assess whether GNI per capita is the best indicator of the changes in SG's SOL over time. Which limitations will apply?

• Non-marketed activities

• Income distribution

• Problems with computing PPP exchange rate

• Leisure and stress levels

Answer explanation

Page 14 of notes: "Recall that the PPP exchange rate can be used for comparison of national income between countries."

Page 15 of notes: "If rising income is accompanied by greater inequality in income distribution, the increase in standard of living for the average resident may be overstated."