problems are based on the table below, which describes the process by which a loaf of bread is made available to a consumer as a final good.

Price (R) of a loaf of bread
Farmer sells wheat to miller 0,70
Miller sells flour to baker 1,05
Baker sells bread to grocer 1,90
Grocer sells bread to consumer 2,25

Indicate your answers to each of the following problems on the answer sheet provided. For each section below select the MOST APPROPRIATE answer from the choices given.

problem1) The total value of a loaf of bread is

a. R1,55.
b. R2,25.
c. R0,35.
d. R5,90.
e. R4,20.

problem2) The value added by the grocer equals

a. R2,25.
b. R1,90.
c. R1,05.
d. R0,70.
e. R0,35.

problem3) If 2000 is the base year for real GDP calculations, we know for certain that nominal GDP

a. is less than real GDP in 2000.
b. is greater than real GDP in 2000.
c. equals real GDP in 2000.
d. in 1999 will be greater than real GDP in 2000.
e. in 1999 will be less than real GDP in 2000.

problem4) In a country with a population of 50 million people, there are 20 million children under the age of 15 years, 16 million employed, 9 million pensioners, 4 million unemployed and 1 million people who are physically unable to work. The unemployment rate in this country equals

a. 8%.
b. 10%.
c.13,3%.
d.20%.
e.25%.

problem5) A consumer’s real purchasing power refers to

a. the nominal income level of the consumer.
b. wage income earned through employment.
c. the maximum volume of goods and services that the consumer can buy.
d. nominal GDP per capita.
e. real GDP deflated by the price level.

problem6) If the cash reserve requirement of the banking system is 20% and banks hold no excess reserves, then the value of the credit multiplier will be

a. 0.
b. 0,2.
c. 5.
d. less than 5.
e. greater than 5.

problem7) Which of the following would cause a decrease in the supply of money?

a. An increase in the rate at which the central bank lends to commercial banks
b. A reduction in the reserve requirement
c. Purchase of government securities by the central bank
d. A reduction in the income tax rate
e. None of the above.

Qustion8) If a commercial bank increases its cash reserves (held at the Reserve Bank) by R5 million, what change in demand deposits will this bring about? Assume the Reserve Bank insists on a minimum cash reserve require ment of 5% and that the banks hold no excess reserves.

a. Demand deposits will increase by R5 million.
b. There will certainly be no change in demand deposits.
c. Demand deposits will increase by R10,1 million.
d. Demand deposits will increase by R100 million.
e. Demand deposits will decrease by R50 million.

problem9) If the Reserve Bank wishes to implement a deflationary open-market policy, which of the following will most likely occur?

a. The Bank will try to lower the repo rate.
b. The Bank will offer more credit to the commercial banks.
c. The Bank will buy securities from the commercial banks.
d. The Bank will sell securities to the commercial banks.
e. The Bank will increase the credit multiplier.

problem10) If people deposit their cash into the demand deposit account with instant access to their money, which of the following is true?

a. The money supply will increase.
b. The demand for money has increased.
c. The supply of money has decreased.
d. The demand for money has decreased
e. The supply of money has not changed